The move supports Metso's growth strategy and will open up a biofuel business opportunity with pulping processes.

Lignoboost's technology extracts lignin, the component of natural wood, from the chemicals used in the pulping process. It can then be used as biofuel, replacing coal and oil in the pulp mills power generation.

President of Metso Power Lennart Ohlsson said: "We see great value in getting a process with such high future expectations.

"Lignoboost has the best chances of being further commercialised for industrial applications in a global company such as Metso."

It is expected that the technology will increase the capacity of a pulp mill and turn the mills into "significant" energy suppliers.

The agreement will see Lignoboost shares, intellectual property, brand and know-how under Metso ownership. The company was formerly a division of STFI-Packforsk, which has signed an R&D agreement with Metso to further develop the Lignoboost technology.

Lignoboost's staff and facilities have not been included in the transaction.

Elsewhere, Metso Paper has closed the deal with Mitsubishi Heavy Industries (MHI) over the acquisition of its paper machinery technology.

The move strengthens its capabilities in Asia and the company has taken on additional staff in Japan.

In 2000 Metso Paper and MHI bought assets from Beloit Corporation after it filed for bankruptcy protection. The acquisition of MHI means Metso is now the sole owner of Beloit Corporation's paper machinery technology.