Private equity firm JC Flowers has warned Friends Provident it will walk away from a bid for the insurer unless it opens talks with it by Friday.
The news rocked shares in Friends, which dropped 9% in afternoon trading.
Friends rejected a 150 pence-per-share £3.5bn proposal from the US firm last month, stating that it was inadequate.
Friends has had a troubled recent history, suffering a steep fall in profits last year and seeing a proposed deal with Resolution come to nothing.
Flowers dismissed suggestions that it might be prepared to raise its offer in a effort to win the firm's support and called for Friends to enter discussions about its existing proposal.
"In the event that the board of Friends Provident does not enter into discussions with JC Flowers prior to the close of business on Friday 18 April, it is JC Flowers' intention to formally withdraw its proposal," it said in a statement.
The Takeover Panel has instructed Flowers to make a formal bid by 30 April or walk away.
Scottish Widows, Friends' largest shareholder, has backed the firm's stance, although other investors are reported to be keen on the two parties opening discussions.
Friends' shares were down 12 pence at 118.6p by mid-afternoon.
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