The chemical and pharmaceutical giant Bayer AG is considering making a bid for the agrochemical company Monsanto, Bloomberg's Aaron Kirchfeld, Ruth David, and Dinesh Nair report.

The combined company would become the world's largest supplier of farm chemicals and seeds, according to the report.

Monsanto's stock surged by as much as 20% in pre-market trading.

Monsanto, which has a market cap of about $40 billion, is the maker of the pesticide Roundup.

The two companies have considered other options in addition to a full merger, including Bayer selling its crop-sciences business, according to Bloomberg.

The news follows a couple of other major deals in agrochemicals.

Chinese chemical giant ChemChina in February agreed to buy the Swiss seed maker Syngenta for $43 billion. In December, Dow Chemical and DuPont announced a $130 billion deal to combine forces.