The companies did not announce a time frame for closing the deal because of regulatory clearance requirements.

The move comes three years after Monsanto began aggressively moving into the vegetable seed arena with the $1.4 billion purchase in 2005 of California-based Seminis, which gave Monsanto control over more than 30 percent of the North American vegetable seed market, as well as more than 20 percent of the world's tomato seed market and more than 30 percent of the global hot pepper seed market.

Last year, Monsanto formed the International Seed Group Inc (ISG) as a holding company for the company's growing investments in regional vegetable and fruit seed businesses.

Unlike the Seminis business, which is primarily directed at the open-field vegetable market, the bulk of De Ruiter's business is for greenhouse growers, known as the "protected culture market," which Monsanto said is the fastest-growing area of the vegetable seed industry today.

Monsanto said the sector had an estimated compound annual sales growth rate of 8 percent to 10 percent over the next five years, with more than $600 million in sales worldwide in 2007.

Strong demand for fresh produce from consumers in North America, Europe and Asia is behind the growth, Monsanto officials said.

Monsanto's total vegetable seed platform should amount to a $1 billion revenue business by 2012, Monsanto Chief Financial Officer Terry Crews said on Monday.

Monsanto shares were down more than 3 percent at $110.15 in mid-morning trading on the New York Stock Exchange.