Monsanto (MON) said on Wednesday it agreed to an improved $128-per-share offer from Bayer, (BAYRY) clearing the way for the creation of the world's biggest farm-inputs supplier.

The bid values St. Louis-based Monsanto at about $66 billion including debt and represents a 44% premium to the target's share price on May 9, the day before Bayer lodged the first of its four bids for Monsanto.

"We believe that this combination with Bayer represents the most compelling value for our shareowners, with the most certainty through the all-cash consideration," said Monsanto chairman and CEO Hugh Grant in a statement.

Shares in Monsanto are likely to open higher on Wednesday as the new offer represents a 21% premium to Monsanto's closing price of $106.10 on Tuesday. Bayer shares traded Wednesday afternoon in Frankfurt at €95.48 ($106.75), up €1.80, or almost 2% on their Tuesday close.

Goldman Sachs analysts noted that Bayer is playing 17.4 times estimated 2016 Ebitda for Monsanto before synergies.

The deal will combine Bayer's crop chemicals business, which ranks No. 2 in the world behind Syngenta (SYT) , with the world's largest seed maker to create a company accounting for just under a third of the global market for farm-inputs. Pro-forma sales of the combined group would have amounted to €23 billion over 2015.

The deal comes amid a spate of consolidation in the agricultural supplies sector. Syngenta, which last year rejected a takeover by Monsanto, is in the process of finalizing a takeover by ChemChina, while Dow Chemical (DOW) - Get Report and Du Pont (DD) - Get Report are working to merge and spin off their seeds and farm chemicals operations.

Bayer and Monsanto said they expect to secure about $1.5 billion in annual synergies from the combination by year three and claimed the bid would increase Bayer's earnings per share in the first full year and by double digits from the third full year after completion.

The deal is subject to approval by Monsanto shareholders.

Bayer has agreed to a $2 billion break fee as part of its offer, which is payable in the event that the deal fails to get past antitrust regulators. Monsanto management has been skeptical of the deal's chances of clearing regulators in the U.S. and the EU without concessions that might make Bayer balk.

Bayer said it will fund the deal with a combination of debt and equity, including a $19 billion sale of new shares and $57 billion of bridge financing provided by Bank of America Merrill Lynch, Credit Suisse, Goldman Sachs, HSBC and JP Morgan.

Some Bayer shareholders have expressed concerns over the amount of debt that the Leverkusen company will take on and the pressure it will place on a balance sheet already nursing €17.45 billion of net debt at the end of last year. They have also worried about the shift in focus to crops away from Bayer's profitable drugs business.

"Bayer's approach for Monsanto now shifts the focus way from pharma and...would reduce any financial power to acquire (drug) pipeline assets," Exane BNP Paribas analysts noted Tuesday ahead of confirmation of the deal.