Monsanto (MON), which agreed Wednesday morning to be acquired by German life science giant Bayer (BAYRY) for $128 per share in cash, has slipped far below the offer price as investors weigh the chance of regulatory approval given the existing mega-mergers in the agricultural industry. Wall Street firms have offered mixed views on the deal, with several analysts voicing their conviction given the limited business overlap, and others calling into question the potentially lowballed terms and significant closure risk.

CLSA SAYS RISK FAR HIGHER THAN SUGGESTED: CLSA analyst Mark Connelly downgraded Monsanto to Underperform while reiterating his $110 target on its shares, arguing that, similarly to the Agrium (AGU)-Potash (POT) deal earlier this week, the merger "has to leave investors wondering whether Monsanto management is at all bullish about the outlook for the agriculture cycle." Calling the deal terms "disappointing," the analyst highlights that the 44% premium to the cyclically low stock is less than 10% higher than where Monsanto traded two years ago and says the $2B breakup free is a "fraction" of what Monsanto itself offered in its pursuit of Syngenta (SYT) during a "far less serious" regulatory environment. Connelly thinks approval risk is "far higher" than both management teams suggest and expects Monsanto shares to trade at a discount to the $128/share offer price.

DEUTSCHE SEES BETTER THAN 50% APPROVAL CHANCE: Deutsche Bank analyst David Begleiter maintained his Buy rating on Monsanto while upping his price target to $128 from $118. He sees more than a 50% chance of the deal being approved, leading him to model 16% upside and 9% downside to the stock by year-end 2017. Though he acknowledges the "regulatory risk" in attempting to create the biggest agricultural company in the world, Begleiter also notes the "limited" product overlap and a "difficult to quantify" impact on industry pricing, adding that the $2B breakup fee is "in-line" with comparable transactions. The analyst reminds investors that key areas of business overlap - and likely divestitures - include cotton and canola seeds, along with herbicides.

Piper Jaffray analyst Brett Wong, who keeps an Overweight rating on Monsanto while lifting his target to $128, says the price tag is "lower than expected." Notably, Wong was "surprised" at the market's skepticism of the deal. He notes "there was a time" when Syngenta was trading at a 20%-plus discount to its own deal with ChemChina, but that arbitrage was cut in half after the Committee on Foreign Investment rubber-stamped the deal. Net-net, the analyst pins his approval conviction on the "minimal crossover" between the two companies and says management commentary signaled a willingness to divest enough assets, though he concedes that Monsanto's remarks around Bayer being the best option for shareholders clearly raises doubt about the company's growth expectations.

BMO EXPECTS CLOSE SCRUTINY: BMO analyst Joel Jackson keeps his Outperform rating on Monsanto while raising his target to the $128 offer price. Though he echoes that product overlaps are "small," Jackson acknowledges that the deal will nevertheless be "closely scrutinized" across the globe given the practical realities of farmer wallet impact, the companies involved, and ongoing reviews of the Dow (DOW)-DuPont (DD) and ChemChina-Syngenta tie-ups. The analyst estimates Monsanto dropping to $95 if the deal fails, and says the stock could trade sideways for weeks or even months. Remarking more specifically on Monsanto's business, Jackson believes the company "did not have confidence" it could deliver its five-year earnings target, or else the Bayer deal simply "would not have been done at $128."

LAWMAKERS ALREADY ON THE ATTACK: Today's mixed analyst commentary follows steep criticism of the deal by U.S. lawmakers, with Senator and former presidential candidate Bernie Sanders calling for an outright block and Senate antitrust leaders Mike Lee and Amy Klobuchar saying they will "encourage the DOJ or FTC to closely scrutinize the transaction."

PRICE ACTION: Shares of Monsanto are down almost 2% to $104.75 this afternoon, representing about an 18% discount to it's agreed upon deal price.