Bayer AG is set for a jump in earnings if it succeeds in taking over U.S. seed giant Monsanto Co. , making the German company a compelling investment opportunity, according to Commerzbank. In a note out on Wednesday, the bank's analysts upgraded Bayer to buy from hold, saying they like the "strategic rationale" of the deal. A takeover would like boost Bayer's adjusted earnings by 8% in the first full year after closing, they said. "We only see one scenario (hostile bid at a substantial premium; 20% probability assumed) in the next steps that may see further downside to shares," the analysts said in the note. Bayer said on Monday it had made a $62 billion all-cash offer for Monsanto in a bid to create a leading company for agricultural products. Monsanto on Tuesday rejected the offer, saying the price was too low, but that it remains open for further deal talks. Shares of Bayer were up 0.1% in Frankfurt on Wednesday, while Monsanto rose 2% premarket. The potential takeover has been met with criticism, with opponents raising concerns it has significant negative implications for farmers and the industry.
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