The proposed combination would create a giant seed and farm chemical company with a strong presence in the U.S., Europe and Asia.
Bayer said the all-cash offer values shares of Monsanto at $122 each. That compares with a closing price Friday of $101.52 and is 37 percent higher than the closing price of $89.03 on May 9, the day before Bayer made a written proposal to Monsanto.
Bayer had said on Thursday that its executives met recently with their Monsanto counterparts "to privately discuss a negotiated acquisition" of the specialist in genetically modified crop seeds, which is headquartered in St. Louis, Missouri. Monsanto said then that it was reviewing Bayer's proposal.
Bayer said it plans to finance the acquisition with a combination of debt and equity. It said that it "is prepared to proceed immediately to due diligence and negotiations and to quickly agree to a transaction."
"Monsanto is a perfect match to our agricultural business," Bayer CEO Werner Baumann said in a video message posted on his company's website. "We would combine complementary skills with minimal geographic overlap."
"The acquisition of Monsanto checks all the boxes in terms of strategic fit and value creation potential," he added. "At the same time, ongoing consolidation activities in the industry make this combination by far the most attractive one."
Baumann said Bayer expects the transaction to "create significant synergies" and bolster earnings in the first full year after it is completed.
Both companies are familiar brands on farms around the globe. Bayer's farm business produces seeds as well as compounds to kill weeds, bugs and fungus.
Monsanto has some 20,000 employees and produces seeds for fruits, vegetables and other crops including corn, soybeans and cotton, as well as the popular weed-killer Roundup.
Bayer, headquartered in Leverkusen, Germany, employs some 117,000 people worldwide.