Bayer AG shares surged by 5% on Monday, after Monsanto was reported to have interest in acquiring its crop-science business. The increase was reported as the highest since August last year.

Monsanto, the agrochemical and agricultural biotechnology giant has initiated a talk to acquire one of Bayer's business unit, the crop science. A source told Reuters that on Friday the two companies had held talks over Bayer's agricultural assets. Bayer crop science is the second-largest crop chemicals business by sales after Syngenta.

Last year, Syngenta rejected the Monsanto approach to take over the Switzerland company. Monsanto which determined to expand its crop chemical business contacted Bayer afterward through BASF.

BASF SE is a familiar partner for Monsanto. Since 2007, Monsanto has been in an agreement with BASF, the largest chemical producer in the world. The two companies signed a long term agreement in research, development, and marketing of new plant biotechnology products.

Bloomberg also confirmed that Monsanto has approached BASF to consolidate its crop chemical business with Bayer, which was also long term partner of BASF. On Friday, the parties discussed the idea of purchase or joint ventures on two crop-science units from Bayer, including cotton crops. The talk also considered to purchase the entire Bayer's crop science business unit later on.

Bayer, BASF and Monsanto declined to comment regarding the matter. Nevertheless, shares of Bayer and BASF jumped higher on Monday after the news breakout. Bayer was up 5.4% at €103.45 while BASF rose 1.1% to €67.20. Both companies are listed as part of Euro Stoxx 50 Index.

UBS analyst Alexandra Hauber, as quoted by CNBC in her note said Bayer's business could be a better fit for Monsanto. "Bayer's crop science business is stronger than BASF in terms of market share, which should put Bayer in more favourable negotiation position vs BASF," she said.

UBS values Bayer's crop science business at €40 billion ($45 billion), which was 15 times higher than its estimated 2017 earnings before interest, taxes, depreciation and amortisation (EBITDA). Meanwhile the entire Bayer group, acccording to Thomson Reuters data, is trading at 9.1 times than its estimated EBITDA for the next 12 months

Bayer Group has four business units: Bayer Pharmaceuticals, Bayer Consumer Health, Bayer Crop Science and Bayer Animal Health. Previously, the company spun off its chemical business unit into Lanxess in 2004, and material science unit to become Covestro last year. Lanxess is the maker of specialty polymers, while Covestro is known for making polyurethanes and special polycarbonates trademarked as Makrolon.

Following Monsanto's interest in acquiring its crop science business, shares of Bayer surged by more than 5% on Monday. Monsanto is keen on expanding crop chemical business and Bayer is seen to be the better fit for Monsanto.