Life assurer Friends Provident today said it had rejected a revised £3.5 billion offer from private equity firm JC Flowers.
Friends said the proposal, worth 150p-a-share, "significantly undervalues" the company and represented no "basis for discussion".
The offer is less than the 175p-a-share New York-based Flowers was reportedly looking at paying in January.
Friends added that the private equity firm's renewed proposal indicated the offer price would be reduced if the life group paid the 2007 final dividend of 5.3p.
"The board of Friends Provident informed JC Flowers & Co that its proposal significantly undervalues Friends Provident and its prospects and does not represent a basis for discussion," the group said in a statement.
Friends has seen its share price tumble in recent months after the collapse of a merger with closed life fund manager Resolution, a deal which was gatecrashed by rival suitor Pearl.
Hopes of a new offer meant Friends' share price jumped 4 per cent to 125.6p, giving the business a market capitalisation of £2.9 billion.
The demise of the merger with Resolution raised concerns that Friends would not have enough financing to fund expansion.
Bosses pledged a renewed focus on protection and group pensions earlier this month as they announced plans to down-size following a strategic review.
But the overhaul - which will also see its asset management arm F&C and other non-core businesses offloaded - failed to inspire investors, as did news that profits dived by 96 per cent to just £16 million in 2007.
Friends said today it remained "focused on the implementation" of its strategic review.
The group has hired Trevor Matthews from Standard Life as chief executive in a bid to turn around its fortunes, but he will not be able to start until the summer.
Flowers already owns more than 2 per cent of Friends shares and is said to have been discussing side deals with a number of potential groups which may be interested in buying parts of Friends Provident.
Friends employs almost 4,000 staff, excluding the F&C business, across offices in locations including Manchester, Exeter, Dorking and Salisbury.