German drugs and crop chemicals company Bayer has won over U.S. seeds firm Monsanto with a takeover offer of around $66 billion, ending months of wrangling after increasing its bid for a third time.
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.
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.
Elsewhere in the industry, U.S. chemicals giants Dow Chemical and DuPont plan to merge and later spin off their respective seeds and crop chemicals operations into a major agribusiness.
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.
— CNBC contributed to this report.
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