JC Flowers has until 30 April to announce a "firm intention" to bid for Friends Provident or walk away, the Takeover Panel ruled.
Under Rule 2.8 of the Takeover Code, should JC Flowers not intend to make an offer for Friends Provident, it could not make another move for the insurer for six months.
On Monday, Friends Provident confirmed it rejected a 150p per share proposal from the private equity firm last week.
Friends Provident believed the £3.5bn proposal “significantly undervalues” the insurer and its prospects and did not warrant further discussions.
Both JC Flowers and Friends Provident accepted today's Takeover Panel ruling.
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Paul Bruns and Elaine Parkes
3,000 left to transfer
Record numbers of people aged 90 plus
From 3 to 10 October