Chr Hansen has signed a conditional agreement to buy Swedish Arla Foods' subsidiary Medipharm, a deal which will strengthen the Danish firm's probiotic activities.
The firm said that Medipharm's specialty on probiotic bacterial solutions will complement Chr Hansen's knowledge in lactic acid and create further grow in the probiotic area.
A price has not been given for the deal, which is expected to complete in 2008.
The acquisition is the latest in a chain of investments to strengthen its position in probiotics.
Work was due to start on a dairy cultures production plant that ingredients firm Chr Hansen claims will be the largest of its kind when it becomes operational in spring 2008.
The €40m investment, which the company says is the largest in its 130-year history, will allow Chr Hansen to strengthen its position as one of the foremost suppliers of dairy cultures for food and beverage production.
Medipharm has subsidiaries in the US, the Czech Republic and Hungary with a total of almost 100 employees and sales close to SEK 130 million (€13.7m).
Chief Executive Lars Frederiksen said the takeover would be natural step in accelerating the growth in the firm's cultures department. He said: "Over the past years we have experienced quite high growth in this business area.
"The agreement further substantiates our strategic focus on developing new and exciting applications with probiotic cultures within the animal health as well as human health areas. We will spend the coming time on getting a thorough overview of all details and then draw up a plan for the future."
Chr Hansen has been busy developing new applications for its probiotic mixes. These have included adding probiotic strains BB-12 and LA-5 to whey drinks. In August the firm saw its probiotic ingredients used in supplements marketed for children in Italy. Paediatric probiotics is a focal point for the company.