Monsanto shares closed 13 per cent below Bayer's all-cash offer on Monday amid concern that regulators may complicate the proposed $62 billion takeover that would create the world's largest seed and crop-chemicals company.
The deal also drew a pledge from US senators to pay it close scrutiny amid accelerating consolidation in the industry.
Monsanto closed at $106 in New York trading on Monday, up 4.4 per cent for the day but lower than Bayer’s $122 bid.
That's partly because of an assumption that there could be "regulatory hiccups", Chris Shaw, an analyst at Monness Crespi Hardt and Co, said in a note.
“There seems to be some real scepticism over the deal, likely due to the increased scrutiny recent mergers have received,” Shaw said.
A combination of Bayer and Monsanto is the third megadeal that promises to reshape the industry that supplies the world's farmers with pesticides and genetically modified seeds.
Regulators are already examining the proposed $130 billion merger between Dow Chemical and DuPont, while national security officials in the US are weighing China National Chemical's bid to acquire Syngenta of Switzerland.
"The accelerating trend of consolidation in the agricultural space should be of deep concern to American consumers, touching as it does on the competitiveness of the industry that provides most of our nation's food," Mike Lee, a Republican senator and chairman of the Senate's sub-committee on antitrust, said on Monday in a joint statement with other senators.
While the combination of Bayer and Monsanto makes sense operationally, regulators could focus on the size of overall market share, as opposed to individual product categories, making it harder for the deal to go through, according to James Govan, a fund manager at Baring Investment Services in London
