Chemical giant Bayer raises stakes to $88b to buy Monsanto

The $88 billion deal - the largest corporate mega-merger in a year full of amalgamation announcements - could reshape the development of seeds and pesticides necessary to fuelling the planet's food supply.

Bayer first made a $US62 billion offer for Monsanto in May and has increased its bid over months of negotiations.

The all-cash deal is valued at about $US128 a share, making it the weightiest all-cash buyout in history, beating the $US60 billion deal between brewers Anheuser-Busch and InBev in 2008.

The merger is likely to warrant intense scrutiny from American and German antitrust regulators, who will assess whether it would unfairly lead to higher prices for farmers worldwide.

Bayer has committed to paying a $US2 billion antitrust breakup fee if the deal falls apart.

The new company would preside over roughly a quarter of the world's seed and pesticide supplies.

Bayer in the US is known largely for its pharmaceuticals, with scientists who developed modern Aspirin and Alka-Seltzer.

But the deal would pivot the 117,000-employee company more towards its farm-targeting business in agriculture chemicals, crop supplies and compounds that kill bugs and weeds.

Monsanto is the world's largest supplier of genetically modified seeds, popular in the US, but still a major source of environmental protests in Europe.

The 20,000-employee company is also the name behind popular broad spectrum herbicide Roundup (glyphosate).

Bayer's sales totalled 46.3 billion euros last year, about 30 per cent of which came from its crop division.

Monsanto's sales totalled $US15 billion last year.

The deal is a sign of just how influential the industry of genetically modified seeds has become around the world.

Decried as unsafe and chemically tarnished "Frankenseeds" by some environmental activists, they have also allowed for greater harvest efficiency, stronger pest resistance and more widespread crop availability around the world.

A US National Academies of Sciences panel of experts said in May there was no "substantiated" evidence genetically engineered crops had triggered human health concerns or hurt the environment.

The companies portrayed the deal as a landmark which would help them invest more in seeds, pesticides and technology for the global harvesting of fruits, vegetables, corn, cotton, soybeans and other crops.

"The whole agricultural industry around the world is basically going thru a transformation,”  said Monsanto's chief technology officer, Robb Fraley.

“It's the last big industry in the world to be digitised.

"This allows to make more investments, have more capabilities and build better products for farmers, that they can use to grow crops with higher yields ... and farm better, farm smarter."

Bayer and Monsanto said they would be seeking antitrust approval in 30 global jurisdictions.

Asked if they were worried over the uncertain regulatory challenge from a new US presidential administration, Monsanto chief executive Hugh Grant said the companies were "much more focused on the innovation horizon than the political horizon".

Liam Condon, the head of Bayer's crop science division, said his company was "pretty confident" the deal would be approved by regulators because both companies have "highly complementary" product lines and geographic offerings.

"We have very, very little overlap,"  he said.

"The whole strategic rationale of the deal is built around encouraging more innovation."