Nathan Bomey

USA TODAY

Health and agricultural giant Bayer is making a bid to acquire seed and pesticide company Monsanto, the companies confirmed.

Bayer issued a statement early Thursday calling its endeavor a "preliminary discussion," following Monsanto's confirmation late Wednesday that it had received an unsolicited deal proposal.

Possible Bayer-Monsanto tie-up could rival Dow-DuPont deal

Germany-based Bayer (BAYN) said its executives recently met with Monsanto to discuss the potential tie-up.

"The proposed combination would reinforce Bayer as a global innovation-driven life science company with leadership positions in its core segments, and would create a leading integrated agriculture business," the company said.

St. Louis-based Monsanto (MON) said its board is reviewing Bayer's proposal and would not comment until it completes the process.

Monsanto shares jumped 5.3% to $102.31 in mid-day trading. Bayer shares traded on the Frankfurt Stock Exchange fell 8.2% to 88.51 euros.

A combination of the two global companies likely would face regulatory scrutiny, providing no assurance that even an agreed-upon deal could be finalized. The Obama administration has killed several high-profile deals in recent months, including Pfizer's attempt to acquire Allergan, Halliburton's bid for Baker Hughes and Staples' acquisition of Office Depot.

But Fitch Ratings analysts said Thursday in a research note that the primary overlap between Monsanto and Bayer is in herbicides, saying that overall their "businesses are largely complementary."

A combined Monsanto-Bayer would have market capitalization of $125 billion and more than 25% market share in crop protection products, U.S. soybean seeds and U.S. corn seeds, according to Fitch, which said the deal "makes strategic sense" but argued neither company needs the tie-up to grow.

The deal talks reflect what could be yet another significant shakeup in the world's agrochemical industry.

In February, state-owned agrochemical firm China National Chemical agreed to acquire Swiss rival Syngenta for $43 billion in the largest acquisition of a foreign company in Chinese history.

In December, U.S. conglomerates Dow Chemical and DuPont agreed to merge in a $69 billion deal that would create a firm called DowDuPont, which would then split into three separate companies, including one focused on agriculture.

The changes come amid a rough patch for the agricultural business. Certain core agricultural prices, such as corn, have suffered, and farm spending is "likely to be flat to down in the mid-single digits" for 2016, Credit Suisse analyst Christopher Parkinson said in a research note May 12.

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.