Germany’s Bayer has increased its offer for Monsanto to $65bn (£49bn), or $127.50 a share, in a bid to create a world-wide seeds and pesticides giant.
Bayer said it was in advanced discussions with Monsanto, but warned there was no guarantee a deal would result.
Its first offer of $122 a share in May was rejected by the US business for being “financially inadequate”.
The record all-cash offer valued Monsanto at $62bn (£43bn at the time).
Bayer raised its offer in July to $125 a share but was rebuffed.
Monsanto and combining Bayer would create the largest provider that is agricultural of the world and be a market leader in the US, Europe and Asia.
The farm company of Bayer makes seeds in addition to compounds to fight insects and weeds, but it is better known because of its health care products for example Aspirin and Alka-Seltzer.
Monsanto is chiefly known for its genetically modified seeds for crops including wheat, soybeans, cotton, corn and sugar cane. Such seeds have brought criticism.
Rivals including DuPont, Dow Chemical and Syngenta have all announced tie-ups recently, although some have not yet been cleared by regulators.
The fall in commodity prices has put pressure on businesses like Monsanto, with farmers’ cutting orders for supplies.
Yet, US competition concerns could be raised by a Bayer takeover of Monsanto because of the sheer size of the control and the combined business it would have over the global seeds and sprays marketplaces.
Farming groups have raised concerns that such mergers could result in higher prices and fewer choices.
Insiders said that although the two businesses were close to reaching an agreement on price, they’d yet to agree on a strategy on how exactly to deal with possible regulatory hurdles.
Shares in Bayer have dropped by close to a fifth this year and finished at €94.24 on Monday, valuing the firm at €78bn.
Monsanto has grown 9% since the beginning of the year and closed on Friday at $107.44, making it worth just over $47bn. Wall Street was closed on Monday for the Labor Day holiday.