Bayer (BAYRY) is expected to announce Wednesday that it has secured a $66 billion deal for U.S. seeds company Monsanto   (MON)  , and investors don't know whether to cheer or weep.

Shares in Bayer climbed in early trading to €94.16 ($105.71), up just under 1% on their Tuesday closing price, before falling back to €93.40 later in the morning, on reports that Monsanto had agreed an improved offer worth $129 a share.

Bayer declined to comment, while Monsanto spokespeople could not immediately be reached.

The agreement, if it is confirmed, would be the biggest ever all-cash deal and the biggest acquisition by a German company. It will also divide analysts and Bayer shareholders, some of whom see merit in a combination that would create the world's No. 1 supplier of farm-inputs, while others fret that Bayer is overstretching to expand into a low-margin market.

Bayer's return on its investment in Monsanto is likely to be about 7% by 2020, below the bidders current cost of capital of 7.7%, according to Exane BNP Paribas analysts. Fund manager Henderson Group plc, one of Bayer's top 20 shareholders, has asked the company to use its cash to buy back shares.

Monsanto shareholders are unlikely to have any such conflicts. An offer of $129 a share may be below the $131 to $135 per share that CEO Hugh Grant had hoped for, but represents a 22% premium to the target's closing price on Tuesday.

Monsanto shares closed Tuesday at €106.10, but rose in pre-market trading to $109, up $2.90, or 2.7%.

The new bid, which according to reports was approved by Monsanto's board on Tuesday, is also said to include a $3 billion break fee, twice the size of the fee included in earlier offers.

To put that in context, the new break fee is worth 30% more than Monsanto's 2015 fiscal year profit of $2.3 billion and is twice its forecast free cash flow for the current year of $1.4 billion to $1.6 billion. That is a sizeable bit of insurance for Monsanto, whose management has remained skeptical that regulators in both the U.S. and Europe will allow a deal to proceed without imposing concessions that would make Bayer balk.

The combination of Bayer's crop chemicals business, which ranks No.2 in the world behind Syngenta   (SYT)  , with the world's largest seed maker will create a company accounting for just under a third of the global market for farm-inputs.

It also comes at a time when deal making threatens to drastically cut competition in the agricultural supplies sector. Syngenta, which last year rejected a takeover by Monsanto, is in the process of finalizing a takeover by ChemChina, while Dow Chemical    (DOW)   and Du Pont   (DD - Get Report)   are working to merge and spin off their seeds and farm chemicals operations.