German multinational Bayer and U.S.-based Monsanto Company (NYSE:MON) today announced the signing of a definitive merger agreement, in a deal that would form the world's biggest seeds and pesticides company.

The all-cash offer values Monsanto at US$128 per share and is equivalent to US$66 billion. 

Bayer AG CEO Werner Baumann said the deal would bring widespread benefits and deliver "substantial value to shareholders."

A joint release said the transaction would unite 'two different but highly complementary' businesses, that would benefit from 'Monsanto’s leadership in Seeds & Traits and Climate Corporation platform along with Bayer’s broad Crop Protection product line.'

The acquisition is subject to approval by Monsanto shareholders and regulatory approvals.

Closing is expected by the end of 2017. Bayer has committed to a US$2 billion antitrust break fee if the deal is not approved by regulators.

The combined business will have its Seeds & Traits and North American headquarters in St. Louis, Missouri, while its Crop Protection and Crop Science headquarters will be in Monheim, Germany. The Digital Farming activities will be based in San Francisco, California.

Bayer said it expected annual EBITDA contributions from total synergies of approximately US$1.5 billion after year three.

Monsanto chairman and CEO  Hugh Grant said the announcement was a testament to everything the company had achieved.

"We believe that this combination with Bayer represents the most compelling value for our shareowners, with the most certainty through the all-cash consideration," he said.

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