German drugs and crop chemicals group Bayer has offered to buy US seeds company Monsanto for $62bn in cash, including debt.
If the unsolicited proposal is accepted, it would mark the biggest foreign takeover by a German firm.
The move would create the world's largest farm supplier, eclipsing a planned combination of Dow Chemical and DuPont's agriculture units.
It comes just three weeks after Werner Baumann took over as Bayer CEO and has been condemned by a major shareholder as "arrogant empire-building".
The offer of $122 per share represents a 37% premium to Monsanto's share price before rumours of a bid emerged.
"We fully expect a positive answer of the Monsanto board of directors," Mr Baumann told reporters on a conference call today, describing criticism from investors as "an uneducated reaction in the media", driven by an element of surprise.
Monsanto, which said last week it had a received an approach from Bayer but gave no details, has yet to comment on the offer.
Mr Baumann is staking his claim as the global agrochemicals industry races to consolidate, partly in response to a drop in commodity prices that has hit farm incomes and also due to the growing convergence between seeds and pesticides markets.
ChemChina is buying Switzerland's Syngenta for $43bn after Syngenta rejected a bid from Monsanto, while Dow and DuPont are forging a $130bn business.
German chemicals group BASF has also been exploring a tie-up with Monsanto but is seen as unlikely to counter bid, sources close to the matter have said. BASF declined to comment today.
The offer values Monsanto at 15.8 times its earnings before interest, tax, depreciation and amortisation for the year ended 29 February.
Mr Baumann said Bayer would continue to develop its healthcare business, which includes stroke prevention pill Xarelto and aspirin, the painkiller it invented more than a century ago.
"We are not feeding Peter by starving Paul here," he said, adding no asset sales were planned to help pay for the deal.
Bayer said it would finance the bid with a combination of debt and equity, primarily a share sale to existing investors. Equity would account for about a quarter of the deal value.
The German company expects synergies to boost annual earnings by around $1.5 billion after three years, plus additional future benefits from integrated product offerings.
This is a reference to Bayer's push to combine the development and sale of seeds and crop protection chemicals.
Monsanto, a major manufacturer of agricultural seeds and herbicides, employs about 20,000 workers and is one of the world's leading biotechnology companies.
Bayer, which employs around 117,000 workers, had global sales in fiscal year 2014 of €46.3bn.
The German firm is ranked second in crop chemicals globally, with an 18% market share, just behind Syngenta on 19%, according to industry data.
Monsanto is the leader in seeds, with a 26% market share, followed by DuPont with 21%.
DuPont agreed last year to merge with Dow Chemical. Any Bayer-Monsanto deal would further reduce the number of major players in seeds and pesticides to four from the current six.
