German business daily Handelsblatt reported Tuesday that the Bayer management was preparing a plan to "turn directly to shareholders" to secure the planned merger.

Citing sources close to management, the option could materialize if Monsanto continued to insist on a price that Bayer saw as "too risky."

Monsanto has already rejected two offers from Bayer, calling an increased bid of $125 (111 euros) per share in July "financially inadequate" because it continued to undervalue the biotech seed giant. However, Monsanto left the door open to further talks.

"In the coming weeks, chief executive Werner Baumann will make a decision: namely whether a friendly merger is still possible, or whether Bayer must choose an alternative path," the sources told Handelsblatt.

By merging the two companies, Baumann hopes to create a globally dominant agrochemical firm with revenues of up to $25 billion. Bayer's last offer valued Monsanto at around $64 billion.

Risky proposition

Observers expect Monsanto chief executive Hugh Grant to reject any offer of less than $67-69 billion - a sum which a spokesman for Bayer shareholder Union Investment considered as too much of a financial risk, Handelsblatt said.

However, Markus Manns of Union Investment already told The Wall Street Journal in July that Bayer still had room to improve its bid. "Bayer has room to improve its offer to a maximum of $135 per share but no more,” Manns said.

According to Handelsblatt, a hostile offer could also see Bayer approaching its upper limit, as it might have to offer an increase of between five to 10 percent on its last bid.

uhe/jd (AFP, Handelsblatt)