Monsanto Co (MON.N), the world's largest seed company, rejected Bayer AG's (BAYRY.PK) US$62 billion acquisition bid, stating that it’s open to a deal but that the current offer is “financially inadequate.”

“We believe in the substantial benefits an integrated strategy could provide to growers and broader society, and we have long respected Bayer’s business,” said Hugh Grant, Monsanto Chairman and CEO, in a statement.

“However, the current proposal significantly undervalues our company and also does not adequately address or provide reassurance for some of the potential financing and regulatory execution risks related to the acquisition.”

The German drugs and crop chemicals group will now have to decide whether to raise its bid for Monsanto, even as the company faces criticism from some shareholders that its US$122-per-share offer is already too high. The other options are to walk away, or mount a hostile bid.

Monsanto shares rose 2.6 per cent to US$107.76 in afternoon trading in New York, but remain far below Bayer's bid price, underscoring investor skepticism that a deal will be reached. Bayer shares rose 3.23 per cent at 87.15 euros in Frankfurt.

--With files from staff