Sir Adrian Montague, the executive chairman of Friends Provident, sig-nalled that he was willing to strike a takeover deal with JC Flowers despite shutting the door on the American buyout firm’s £3.5 billion all-cash bid.

Sir Adrian said yesterday that there was “no grand canyon” between the two companies over price and that Flowers had “started down the track” in terms of putting together a proposal worth discussing. However, he repeated his call for an end to the uncertainty created by the American firm’s interest in the life and pensions group and admitted that it was potentially damaging. Sir Adrian said: “I was hoping for a proposal that offered a reasonable price. I wanted it to be fully financed and not to be contingent. They have started down that track. They have got to do something that is good for our shareholders.

“We all need to have certainty soon here. Investors need it. I’m sure Flowers wants it. This uncertainty is creating some difficulties in the way we are dealing with our counterparties,” he said. The chairman also insisted that Friends was perfectly content to go it alone as an independent company.

Sir Adrian was speaking as Friends rejected a 150p-a-share proposal from JC Flowers, received by letter last Thursday. The price included a proposed final dividend of 5.3p a share. Friends said that the bid plan “significantly undervalues Friends Provident and its prospects and does not represent a basis for discussion”.

It is understood that Friends contacted the Takeover Panel last week to discuss whether it might impose a “put-up or shut-up” deadline on JC Flowers, which has been circling Friends for almost a year.

A panel deadline would force Flowers to table a firm, fully funded takeover proposal within a set time-frame or risk being banned from making an offer for the next six months. A decision from the Panel could come within the next few days.

JC Flowers declined to comment. Sources said the buyout firm was considering its next move. It is understood that it has funding commitments in place from Morgan Stanley and Citigroup, its advisers.

The buyout firm admitted in January that it had been building its stake and had accumulated a holding of about 2.7 per cent.

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