The two US firms will target the development of a new product through the combination of Diversa's enzyme development platforms together with Cargill's bioprocessing knowledge.
The largest private firm in the US, Cargill's health arm, Health and Food Technologies is building up a portfolio of health-promoting ingredients, such as soy, sweeteners and phytosterols.
This latest agreement is expected to bring new gains throug cost-savings in a blooming market currently enjoying high single digit growth.
Market researchers Euromonitor pitched the US packaged functional foods market at $5.2 billion in 2004, up 8 percent on the previous year. By 2009 it expects it to reach around $6.9 billion, representing 32 percent growth over the next five years.
Under terms of the agreement, Diversa said it will receive upfront payments and research funding, and is entitled to receive milestone payments, license fees, and royalties on products that may be developed.
"Oil processing and nutrition products represent one of Diversa's strategic focus areas, and we are pleased to be partnering with Cargill on this opportunity," commented Jay M. Short, Diversa's President and CEO.
The global enzyme market is estimated to be in the range of $2 billion.