by Jeffrey McCracken, Aaron Kirchfeld and Manuel Baigorri

Negotiations between Bayer AG and Monsanto Co. are advancing toward a deal after the companies made progress on issues including the purchase price and termination fee, people familiar with the matter said.

Bayer Chief Executive Officer Werner Baumann and his U.S. counterpart Hugh Grant have had a series of constructive meetings in recent weeks, said the people, who asked not to be identified because the discussions are private. The companies, in talks to create the world’s largest producer of seeds and pesticides, could reach an agreement in the next two weeks, said the people, who cautioned that negotiations could still fall apart or be delayed.

Related: Monsanto rejects Bayer’s $62 billion bid

Leverkusen, Germany-based Bayer has been examining Monsanto’s financial accounts as it weighs a new offer, people familiar with the matter said earlier this month. Monsanto in July rejected Bayer’s improved $55 billion bid, describing the $125-a-share proposal as “financially inadequate.” An agreement would end months of back-and-forth that followed Bayer’s initial offer in May.

Representatives for Bayer and St. Louis-based Monsanto declined to comment.

Shares of Monsanto rose 3% to $107.60 at 10:09 a.m. in New York, giving it a market value of about $47 billion. Bayer gained 0.6% to 96.51 euros in Frankfurt, valuing the company at about $91 billion.

Antitrust Race

The global agricultural industry is being reshaped as farmers, hurt by lower commodity prices, spend less, pushing seed and chemical makers to consolidate. Dow Chemical Co. and DuPont Co. announced a plan in December to merge and then break into three entities, including a Monsanto-sized agriculture company. China National Chemical Corp. on Monday received approval from U.S. national security officials for its takeover of Swiss agrochemical and seeds company Syngenta AG, seen as the biggest regulatory hurdle that the $43 billion acquisition faces.

Related: Bayer-Monsanto bid may trigger more scrutiny for rival deals

Approval for ChemChina’s purchase of Syngenta from the Committee on Foreign Investment in the U.S. has given fresh impetus to Bayer’s pursuit of Monsanto. Given that all three agricultural deals will need antitrust approval, there’s an incentive not to be the last one seeking clearance as the market will already have been consolidated by the other deals.

Dow and DuPont face months of haggling with European Union regulators who opened an in-depth probe to check whether the combination may reduce competition in areas such as crop protection, seeds and certain petrochemicals. Syngenta said yesterday it’s working closely with “numerous regulators around the world,” and discussions remain “constructive.”

Related: Monsanto reported to rebuff new Bayer offer

Offer Price

Baumann, who became CEO in May after more than 20 years with Bayer, remains convinced of the rationale of the combination and is intent on getting the deal done despite initial disagreements with Monsanto over the price, people familiar with the matter had said.

Monsanto may be willing to come to the table for $130 a share, Argus Research analyst Bill Selesky said in June. Analysts at Sanford C. Bernstein said the company may decide to sell if Bayer raises its offer to $135 a share.

The German company’s promise to pay Monsanto $1.5 billion if the deal doesn’t pass muster with regulators may also not be enough, analysts, including Jeffrey Zekauskas of JPMorgan Chase & Co., have said.

Related: Bayer raises bid for Monsanto to $125 per share

--With assistance from Andrew Noël and Ed Hammond.

To contact the reporters on this story: Jeffrey McCracken in New York at [email protected]; Aaron Kirchfeld in London at [email protected]; Manuel Baigorri in London at [email protected]

To contact the editors responsible for this story: Aaron Kirchfeld at [email protected]

Amy Thomson, Simon Casey

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