Chemicals giants agree £50bn takeover deal

German chemicals giant Bayer (LSE: 0P6S.L - news) has agreed a $66bn (£50bn) deal to swallow up seed and weedkiller company Monsanto (Hamburg: 1132157.HM - news) .

The deal will create a company with more than a quarter of the combined world market for seeds and pesticides in the farm supplies industry.

It is the largest ever takeover by a German company.

Bayer, maker of drugs such as Aspirin and Alka-Seltzer, is expected to complete the deal by the end of next year.

Monsanto, known for its controversial genetically-modified products, will keep its seed business - and the US headquarters of the merged group - at its home city of St Louis.

The deal is subject to approval by shareholders and regulators - who are expected to look into whether any part of the business will have a dominant market position.

Experts think parts of the business may have to be sold off to win approval.

Analysts at Bernstein Research have said they see only a 50% chance of the takeover winning regulatory clearance.

Bayer has agreed to pay a $2bn (£1.5bn) break fee if the deal does not go through.

Some of the German company's shareholders have been critical of a deal they say risks overpaying and neglecting the company's drug business.

Bayer is paying $128 (£97) per share for Monsanto, a 44% premium on its price in May before a proposed deal was announced.

Two earlier offers at lower prices were rebuffed.

Bayer boss Werner Baumann said the deal "reinforces Bayer's leadership position as a global innovation driven life science company".

Monsanto chief executive Hugh Grant said: "We believe that this combination with Bayer represents the most compelling value for our share owners."

Consolidation elsewhere in the chemicals sector has seen Switzerland's Syngenta (LSE: 0QOP.L - news) snapped up by China's state-owned ChemChina.

Elsewhere, US chemicals giants Dow Chemical (Hanover: DCH1.HA - news) and DuPont plan to merge and later spin off their seeds and crop chemicals operations.