An agreement had been signed for Bayer to pay $128 per share, up from its previous offer of $127.50 a share.
That would be the biggest takeover deal of the year so far and the largest cash bid on record.
“We are pleased to announce the combination of our two great organizations. This represents a major step forward for our Crop Science business and reinforces Bayer’s leadership position as a global innovation driven Life Science company with leadership positions in its core segments, delivering substantial value to shareholders, our customers, employees and society at large,” said Werner Baumann, CEO of Bayer AG.
The deal would create a company commanding more than a quarter of the combined world market for seeds and pesticides in the fast-consolidating farm supplies industry.
However, competition authorities are likely to scrutinize the tie-up closely, and some of Bayer’s own shareholders have been highly critical of a takeover plan which they say risks overpaying and neglecting the company’s pharmaceutical business.
The companies have agreed on an antitrust break fee of $2 billion and the deal is expected to be closed by the end of 2017, the German group said in a statement.
Bayer intends to finance the transaction with a combination of debt and equity. The equity component of approximately $19 billion is expected to be raised through mandatory convertible bonds and a rights issue, it added.
Bayer’s move to combine its crop chemicals business, the world’s second largest after Syngenta, with Monsanto’s industry leading seeds business, is the latest in a series of major tie-ups in the agrochemicals sector.
The German company is aiming to create a one-stop shop for seeds, crop chemicals and computer-aided services to farmers. That was also the idea behind Monsanto’s swoop on Syngenta last year, which the Swiss company fended off, only to agree later to a takeover by China’s state-owned ChemChina.
With a total value of around $66 billion — based on 442 million Monsanto shares and the U.S. group’s net debt of $9.3 billion as of the end of May — the deal would be the largest transaction ever involving a German buyer.
It would trump Daimler’s tie-up with Chrysler in 1998, which valued the U.S. carmaker at more than $40 billion. It would also be the largest all-cash transaction on record, ahead of brewer InBev’s $60.4 billion offer for Anheuser-Busch in 2008.
Bayer and Monsanto were in talks to sound out ways to combine their businesses as early as March, which culminated in Bayer coming out with an initial $122 per-share takeover proposal in May.
Antitrust experts have said regulators will likely demand the sale of some soybeans, cotton and canola seed assets as a condition for approving the deal.