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How to Trade Monsanto Stock on M&A Rumor

Is Monsanto (MON - Get Report) about to be taken out? Wall Street seems to think so, as shares of the agriculture specialist soared almost 12% Thursday, reaching a high of $100.85 on reports that Germany's Bayer (BAYRY) is positioning itself to buy the St. Louis-based company for an estimated $65 billion.

Monsanto, the world's largest manufacturer of seeds for planting, would make a great addition to Bayer, which has its own seed and crop portfolio.

Given the recent stance by federal regulators, who have blocked several large deals, it's risky to trade either Monsanto or Bayer stock based solely on the M&A rumor. And even if either company were to publicly state their interest in a deal, tons of hurdles and restructuring concessions by both companies would have to be...