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German drug and chemicals-maker Bayer has made a takeover bid for agricultural giant Monsanto in a deal that could create the world's biggest supplier of seeds and pesticides.

Monsanto is known as a specialist in genetically modified crops.

The offer comes amid a wave of consolidation in the industry, with rivals Dow Chemical, DuPont and Syngenta all entering mergers recently.

However, any tie-up is likely to depend on regulators' competition concerns.

"There is no assurance that any transaction will be entered into or consummated, or on what terms," Monsanto said in a statement.

It added there would be "no further comment" until the board of directors completed its review of the proposal.

Bayer confirmed the talks saying it "recently met with executives of Monsanto to privately discuss a negotiated acquisition" with the goal of creating "a leading integrated agriculture business."

Shares in Bayer closed down more than 8% on Thursday after the offer was announced.

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There has been speculation for some months that Monsanto, the world's biggest seed company, could become a target for either Bayer or BASF.

Bayer, which has a market value of about $90bn, is the second-largest producer of crop chemicals after Syngenta.

Monsanto, which has a market capitalisation of $42bn, attempted to buy Swiss rival Syngenta last year.

However, Syngenta ended up accepting a $43bn offer from ChemChina in February, although that deal is still being reviewed by regulators in the US.

Bayer's acquisition of Monsanto is expected to be bigger in value than the ChemChina-Syngenta deal.

The biggest merger in the chemicals industry took place late last year when Dow Chemical teamed up with Du Pont to form a new $130bn company.

Merger worries

Currently agricultural commodities such as corn and soybean are trading at low prices, hurting farmers' incomes and also profits at seed and chemical companies.

Lower sales of seeds, fertilisers and pesticides have led to higher inventories, forcing companies to cut prices and look at ways to become more efficient.

However, a tie-up between Bayer and Monsanto could raise US competition concerns because of the sheer size of the combined company and the control they would have over the seeds and sprays business.

Farmer groups have raised concerns that such mergers could lead to fewer choices and higher prices.