Seed giant

Monsanto

(MON)

agreed to acquire cotton-seed breeder

Delta and Pine Land

(DLP)

for $1.5 billion in cash.

Monsanto will pay $42 a share for the company, representing a 16% premium over Delta and Pine's closing price of $36.24 Monday.

"Delta and Pine Land represents an excellent fit for our company as we look to bring value-added traits and high-quality seed to cotton growers around the world," said Hugh Grant, chairman, president and chief executive of Monsanto, in a press release Tuesday. "Delta and Pine Land has strong cotton genetics, and we believe Monsanto's leadership in providing the best cotton traits can improve on this already strong base."

Monsanto expects the deal to add to earnings by the second year of the deal's close. The company didn't provide a projected time frame for the closing of the deal.

As part of the agreement, Monsanto said it will sell the U.S. assets of its Stoneville cottonseed business if required by regulatory authorities to close the deal.

Monsanto and Delta and Pine attempted to merge in 1998, but the deal was aborted the next year after Monsanto couldn't reach a deal with regulators over antitrust concerns.

Shares of Delta and Pine were surging $4.58, or 13%, to $40.82 in premarket trading.