The planned acquisition of Synpart is worth up to €6.3m and should be completed by August, 31.
The deal will see Westone, the oral care division of the Pharmaceutical player Alltracel, join forces with Synpart.
The Germany-based firm had run as a profitable concern since its inception in 2004 had a turnover of €13m in 2006.
The deal will result in the fusion of Westone and Synpart, leading to the creation of Synpart Limited, which will provide a full range of oral care products from toothpaste to breath freshening tablets.
The two companies already have an established relationship as Synpart was an agent for Westone's dental floss products in the German-speaking territories of Europe.
Alltracel said the acquisition would allow the company to secure leadership in the European market and expand operations in Asia.
The company is also looking to take advantage of Synpart's established sourcing network in India.
"The acquisition of Synpart will mark a step change in our European presence in the specialist oral care market significantly strengthening our portfolio of products and securing another critical Asian supply network," said Alltracel CEO Tony Richardson.
Synpart plans to use the Indian network and develop Westone's presence in China in order to expand operations in two of the fastest growing oral care markets in the world.
From Synpart's perspective the acquisition will allow the firm to benefit from the resources at Alltracel.
Helmet Schlieper, CEO of Synpart, said: "We will be able to benefit from increased scale and product offerings and an ability to bring greater technological innovation to both our private label and propriety brand customers more quickly."
The newly established business will be looking to exploit the oral care market, which Global Industry Analysts estimate will be worth $30 by 2010.