Wealth management giant Tilney Group has made a bid to buy Smith and Williamson in the face of a rival offer from Rathbones, according to reports.
Last week, Rathbones confirmed they were in talks over a £2bn all-share merger with Smith and Williamson.
The acquisition was expected to be announced next week.
But according to City sources, Tilney Group, which has been making a raft of acquisitions in recent years, including that of Towry for £600m a year ago, has now also made an all-cash bid for Smith and Williamson, Sky News reports.
Both Tilney and Smith and Williamson declined to comment.
Smith and Williamson told sources it will continue the transaction with Rathbones rather than Tilney, reports suggest. The tie-up would bring together two companies employing a total of 3000 people.
Rathbones has been expanding its services for several years, including by buying IFA network Vision Independent Financial Planning in an £18m deal in 2015, following on the back of deals to buy the private client businesses of both Jupiter and Tilney a year earlier.
Rathbones controls £32bn on behalf of its clients, while Smith and Williamson manages nearly £20bn.