German drug and crop chemical group Bayer has announced details of a sweetened $64 billion bid for Monsanto as it tries to put the US seed company under pressure to engage further.
Analysts and some Monsanto shareholders were quick to suggest that Bayer's latest offer, the largest all-cash takeover bid on record, was unlikely to entice Monsanto.
But Bayer is hoping that the sweetened offer will spur enough Monsanto shareholders to call on the company's management to be more accommodative.
Global agrochemicals companies are racing to consolidate, partly in response to a drop in commodity prices that has hit farm incomes.
Bayer made its bid for Monsanto public in May, but the two companies have made little progress since in negotiating a deal.
Monsanto's CEO Hugh Grant said last month that the company was in talks with Bayer and other companies in its sector about "alternative strategic options."
He did not name the other companies, but Reuters has previously reported that Monsanto had discussed a business combination with BASF.
Bayer said it had raised its offer to $125 a share from $122 in cash and offered Monsanto a $1.5 billion reverse antitrust breakup fee, "reaffirming its confidence in a successful closing."
Bayer also said it had comprehensively addressed Monsanto's questions about financing and regulatory matters, and that it was prepared to make certain commitments to regulators, if required, to complete a deal.
Monsanto said its board would review Bayer's latest proposal, in consultation with its financial and legal advisors.
While Monsanto has shared more information with Bayer since May, it has yet to provide it with a confidentiality agreement that would allow the German company to go over its books, the sources said.
The seeds and agrochemicals industry, long dominated by six large companies, has been jolted by several large deals in the past year as low crop prices and belt-tightening by farmers pressured earnings.
Syngenta agreed in February to be acquired by ChemChina for $43 billion, while Dow Chemical and DuPont struck a $130 billion megamerger last year.
ChemChina and Syngenta however are still waiting for the US to clear their deal based on any national security concerns.
Bayer's relatively modest price increase in its offer also reflects the view that Monsanto's recent poor earnings have weighed on its valuation.
Monsanto said last month that its net income tumbled more than 37% to $717m in the quarter ended on May 31.
It cited a global glut of generic glyphosate, the active ingredient in its Roundup herbicide, and delays in securing European Union import approval for its next-generation biotech soybeans.
