Bayer sweetens Monsanto bid as talks enter final stretch

German pharmaceutical and crops manufacturer Bayer AG (BAYGn.DE) said on Monday that its negotiations with Monsanto Co (MON.N) had advanced, and that it was now willing to offer more than $65 billion to acquire the world's largest seeds company.

Bayer's announcement came as the gap in price expectations between the two companies has narrowed significantly, although important terms, including potential divestitures in case of antitrust scrutiny, have yet to be agreed on.

Bayer in a statement said that it was prepared to offer $127.50 per share in connection with a negotiated deal, up from its previous offer of $125 per share. The Bayer statement confirmed a report by German daily Rheinische Post earlier on Monday.

Rheinische Post also reported, citing sources which it did not identify, that an offer of $130 per share may be necessary to clinch a deal with Monsanto "in a swift and friendly way."

In a brief statement, Monsanto said on Monday it had been engaged in "constructive" negotiations with Bayer, during which it received the updated non-binding acquisition proposal for $127.50 per share in cash.

The Saint Louis-based company added that it was continuing these conversations as it evaluated Bayer's offer, as well as proposals from other parties it did not name. It cautioned that there was no certainty that any deal would occur.

Bayer's bid was already the largest all-cash proposed takeover on record. A deal with Monsanto would give the German company a shot at grabbing the top spot in the fast-consolidating farm supplies industry.

ChemChina agreed earlier this year to buy Switzerland's Syngenta (SYNN.S) for $43 billion, after the latter rejected takeover approaches from Monsanto. Dow Chemical Co (DOW.N) and DuPont (DD.N) are forging a $130 billion merger, which is to be followed by a break-up into three businesses.

In July, Bayer raised its earlier offer of $122 per share to $125 to put Monsanto under pressure to engage further.

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