Bayer AG BAYRY 1.19% raised its offer to buy Monsanto Co. and create a new global leader in seeds and pesticides, though the German firm said the higher price depended on achieving a “negotiated transaction.”

Bayer, which has been discussing a deal with Monsanto since mid-May, said it would pay $127.50 a share for the St. Louis-based biotech seed giant, up from its previous offer of $125 a share. The higher offer values Monsanto at over $65 billion, including debt.

Monsanto acknowledged the improved offer, and called the discussions with Bayer “constructive.”

“Monsanto is continuing these conversations as it evaluates this proposal, as well as proposals from other parties and other strategic alternatives to enable its Board of Directors to determine if a transaction in the best interests of its shareowners can be realized,” officials for the company said.

Executives of the pharmaceutical giant have said that acquiring Monsanto, the world’s largest supplier of crop seeds and genes, will create a global firm with a deep portfolio in pesticides, positioned to help farmers around the world produce food for a growing and more affluent population.

Werner Baumann, who took over as Bayer’s chief executive just weeks before launching what would be the aspirin maker’s biggest-ever acquisition, is pursuing the deal as rivals in the $100 billion global market for seeds and pesticides seal their own mergers. Mr. Baumann has faced pushback from some Bayer shareholders, however, who have worried about Bayer shifting focus away from its pharma division.

Monsanto has said it sees the virtues of combining its prowess in seeds with Bayer’s much broader range of pesticides, but Monsanto’s board in July unanimously rejected Bayer’s previous offer of $125 a share as too low and “insufficient to ensure deal certainty.” Analysts have said around $135 to $140 a share may be a more realistic price.

Bayer said Monday that there was no assurance a deal would be struck, and if one was, it would remain subject to regulatory approvals.

Monsanto shares settled Friday at $107.44. Bayer shares settled 0.7% lower Monday at €94.24 (about $105).

Monsanto is weighing Bayer’s takeover proposal as the U.S. company’s own profits have come under pressure from the slumping farm economy, where bin-busting harvests have pushed down grain prices and forced farmers in the U.S. and elsewhere to reduce spending on everything from crop seeds to tractors and land. The U.S. Department of Agriculture last week projected that U.S. farm incomes this year will hit their lowest point since 2009, forcing more farmers to consider switching to generic weedkillers, put off buying new machinery, and trade down to cheaper seeds.

Monsanto has responded to the downturn by laying off about 16% of its global workforce and curtailing some research projects, including a Brazilian sugar cane effort.

While Bayer has touted its deal as offering Monsanto investors an attractive price for the company, some Monsanto shareholders have said that Monsanto should seek a higher figure based on the long-term potential of some of its investments, including a data analytics business that crunches weather, soil and crop information to formulate farming advice.

Bayer and Monsanto have few alternative partners. DuPont Co. and Dow Chemical Co. , which both maintain big divisions focused on seeds and crop sprays, unveiled their own merger in December, a plan that eventually will lead to the spinoff of three independent companies, including one focused on agriculture. That deal’s closing now is likely to slip into early 2017 after European Union antitrust officials moved to open an in-depth probe of the deal, citing competitive concerns in herbicides and insecticides, among other product lines.

Syngenta AG , another top seed and pesticide maker, is moving ahead with a planned sale to China National Chemical Corp. for $43 billion, in a deal that would broadly expand China’s heft in high-tech seed development as the country works to modernize its agricultural sector. That deal last month won a key nod from the Committee on Foreign Investment in the U.S.

Write to Jacob Bunge at jacob.bunge@wsj.com</s>The German pharmaceutical and chemicals group Bayer said it would sweeten its offer for US rival Monsanto.

In a statement released late Monday, Bayer said it would raise its offer for the US seed giant to $127.50 per share from $125. That would bring the deal's total value to almost $66 billion including debt.

Monsanto confirmed Bayer's improved bid for a friendly takeover and said it was evaluating the proposal, "as well as proposals from other parties and other strategic alternatives".

It said there was no guarantee a deal would be struck.

Monsanto rejected Bayer's previous offer in mid-July, saying it was "financially inadequate", but left the door open to further discussions.

With its new offer, Bayer also said it has no intention of carrying out a hostile takeover.

The German daily Handelsblatt reported in mid-August that Bayer was considering a hostile bid if faced with ongoing opposition from Monsanto.

A deal would create a global leader in genetically modified seeds and pesticides.

Monsanto pursued its own takeover of Swiss Syngenta for more than a year as well as BASF SE's agrochemicals unit, Bloomberg reported.

Germany's BASF could still play the role of white knight helping Monsanto fend off Bayer's bid, Bloomberg said in mid-July.

Bayer was down 0.20 percent in early trade on the Frankfurt stock exchange Tuesday.</s>The $63.5 billion offer on the table for U.S. seed giant Monsanto was already the biggest takeover bid this year. But in an effort to clinch a deal, Germany's Bayer says it's ready to go even bigger.

Bayer (BAYRY) said Tuesday it's prepared to pay $65 billion in cash to create a huge conglomerate spanning pharmaceuticals, health products and pesticides.

Monsanto (MON) shot down Bayer's two previous offers, but now the companies are in advanced talks, the German firm said.

It's not the only one interested, though, according to Monsanto. The U.S. company said its weighing Bayer's sweetened offer along with "proposals from other parties and other strategic alternatives."

Related: Monsanto takeover would be biggest deal of 2016

Bayer is now offering $127.50 per share, up from previous bids of $122 and $125. Monsanto shares in New York closed Friday at $107.44, suggesting investors were cautious about the prospects of a successful deal.

The latest offer values Monsanto's equity at about $56 billion. Including debt, the deal would be worth $65 billion.

If the two companies can reach an agreement, it would be the latest mega-merger struck in the agribusiness and chemical sectors. Last year, Dow and DuPont combined to form a new industrial giant worth $130 billion.

In February of this year, ChemChina agreed to pay $43 billion for Syngenta (SYENF), a company that Monsanto had previously tried to buy.

The ChemChina-Syngenta deal is currently the biggest announced worldwide so far this year.

Bayer, which is strongest in Asia and Europe, stands to gain from Monsanto's expertise in agriculture and seeds. It would also benefit from Monsanto's regional strength in North America.

Bayer has said the combining the companies -- which would need regulatory approval -- would generate synergies of $1.5 billion over three years.

-- Charles Riley and Rob McClean contributed to this report.</s>Policy: Bhutan’s annual debt service obligations of total external debt will not exceed 25 percent of total exports of goods and services, according to the new public debt policy launched yesterday.

The thresholds for non-hydro power debt stock is fixed at 35 percent of gross domestic product (GDP) during the Five Year Plan period, while the general government debt should be less than 22 percent of domestic revenue in any given financial year.

The policy stipulates that short-term external debt, including debt contracted by the Royal Monetary Authority shall not exceed 30 percent of surplus reserves in any given financial year. Sovereign guarantee issuance for public corporation borrowing is limited to five percent of the country’s GDP each year.

The thresholds can be breached only in times of economic crisis and other times when the government has no means to raise additional debt to maintain socio-economic stability. It will have three years to stabilise the economy under such conditions.

The hydropower related external debt has to maintain a ratio of debt service to hydropower export revenue of less than 40 percent. The debt to equity ratio of hydropower projects cannot exceed 70:30.

The thresholds are to reduce the undue debt burden that might arise from indiscriminate borrowing for social projects, which do not necessarily generate financial returns. Other considerations are aimed at ensuring fiscal discipline and avoiding ad-hoc, short-term borrowing which are generally costly.

The recent economic growth was coupled with increasing public debt, comprising largely of external debt for hydropower development.

If the country continues with similar growth rates, it is expected to graduate to a middle-income country status in the next decade. If so, Bhutan will not be eligible to avail low-cost finance that has fuelled growth till date.

With the increased GDP per capita, the present concessionary lending terms offered by the multilateral agencies are expected to change. This will mean that the government will have to seek new sources of finance for its capital expenditures. In view of the dwindling grants, external borrowing is expected to increase hereafter.

The absence of a clear policy guideline on public debt management and borrowing poses risks due to unsustainable borrowings. From this perspective, a prudent debt management policy assumes high importance.

Finance minister Namgay Dorji said that a well-articulated debt management policy will help to ensure that the government’s financing needs and that debt obligations are met at the lowest possible cost with a prudent degree of risk.

“The policy leaves no opportunity in future to avail excessive borrowings, harming the long-term interests of the nation to meet their short-term party pledges,” he said.

Effective debt management will be of paramount importantance in ensuring that debt financing is sustainable and contributes to the economic growth of the country, and ultimately in achieving the overarching development objective of Gross National Happiness, the minister said.

The public debt policy provides a broad framework to guide decisions that will ensure sustainable debt levels and efficient portfolio management.

It extends to all public and publicly guaranteed external and domestic debt of Bhutan. However, given the nascent stage of development of the domestic debt market, the thresholds in this policy shall apply only to external debt, until such time the thresholds for domestic debt can be determined to compliment this policy.

“This policy will enable the government to proactively guide its investment plans and ensure that financing decisions are prudent and public debt is maintained at a sustainable level,” Lyonpo Namgay Dorji said.

The debt management division of the finance ministry will be upgraded to a department. Until then a public debt advisory committee will be formed.

The policy is governed by the Constitution, the Public Finance Act of Bhutan 2007, the Audit Act of Bhutan 2006 and the Royal Monetary Authority of Bhutan Act 2010, and amendments thereof.

The Cabinet approved the policy, formulated by a committee from the National Statistical Bureau, Gross National Happiness Commission, finance ministry, Royal Monetary Authority, and hydropower and power systems department, in the past two years, in its 109th session on August 2 this year. The policy is effective from August 18.
Bayer reproposes to buy Monsanto at a new exchange of US$65 billion including debt.