(Reuters) - Audio components maker Knowles Corp has hired JPMorgan investment bankers to advise it on its defense against demands by shareholders Caligan Partners LP and Falcon Edge Capital LP to seek a review of its Precision Devices unit, according to a source familiar with discussions between the parties.

FILE PHOTO: A view of the exterior of the JP Morgan Chase & Co. corporate headquarters in New York City May 20, 2015. REUTERS/Mike Segar/Files/File Photo

The source also said the two funds, which together hold more than 6.7 percent of Knowles and are seeking to nominate two new members to its board, are still prepared to work cooperatively with the company on solutions.

Shares in Knowles have risen about 3 percent since Caligan and Falcon went public with their demands at the end of last week, after settlement talks between the shareholders and the company stalled.

JPMorgan’s involvement in the conflict was first reported earlier on Thursday by Dealreporter.

The source said the funds were unwilling to agree to demands by Knowles that the funds enter a two-year stand-still agreement in return for a single board seat.

After an overwhelming vote in favor of de-staggering the company’s board at its last annual meeting, six of Knowles’ board members will be up for re-election at a 2020 shareholders’ meeting. A two-year standstill agreement would require the activists to vote in favor of all board proposals till 2021.

While Caligan and Falcon were open to settling for one seat instead of two, the stand-still demand, described as "off-market" in the funds' letter here dated March 29, was a dealbreaker, the source said.

Caligan and Falcon Edge also posted a presentation (bit.ly/2YNXqka) on Wednesday, demanding the company release detailed financials for its struggling Intelligent Audio segment.

The funds said they believe Knowles’ stock could reach at least $28 per share in value by the end of the year if the company listened to their feedback.

JPMorgan, Caligan Partners, Falcon Edge and Knowles Corp declined to comment.

(This story corrects headline to remove reference to legal counsel.)