Define: White Knight

A White Knight refers to a company or individual that comes to the aid of a target company facing a hostile takeover attempt by another company, known as the Black Knight. The White Knight offers a more favorable acquisition proposal to the target company, aiming to protect its interests and prevent the hostile takeover.

A White Knight protects a target company by offering a more attractive acquisition proposal, which may include better financial terms, strategic benefits, or a higher valuation. This alternative offer gives the target company’s shareholders an opportunity to consider a more favorable option than the hostile takeover bid.

No, a White Knight cannot be forced to acquire a target company. The decision to acquire a company is voluntary and depends on the White Knight’s strategic interests, financial capabilities, and assessment of the target company’s value. If the White Knight decides not to proceed with the acquisition, it is under no obligation to do so.

Generally, there are no specific legal restrictions on becoming a White Knight. However, the acquisition process must comply with applicable laws and regulations, including antitrust laws, securities regulations, and corporate governance rules. The White Knight must ensure that its actions are lawful and do not violate any legal requirements.

Yes, a White Knight can collaborate with the target company’s management. In fact, such collaboration is often crucial for the success of the alternative acquisition proposal. The White Knight and the target company’s management may work together to develop a comprehensive strategy, negotiate terms, and gain support from the target company’s shareholders.

Yes, a White Knight can be outbid by another bidder, including the original hostile bidder (Black Knight) or any other interested party. The acquisition process is competitive, and the target company’s shareholders have the right to consider all offers before making a decision. The White Knight must present a compelling proposal to increase the likelihood of its bid being accepted.

If the target company’s shareholders reject the White Knight’s acquisition proposal, the White Knight’s bid will not proceed, and the hostile takeover attempt may continue. The target company’s management and shareholders will need to evaluate the available options and determine the best course of action to protect their interests.

Yes, a White Knight can face legal challenges from the Black Knight or any other party involved in the acquisition process. Legal challenges may arise if there are allegations of unfair practices, violations of securities laws, or breaches of fiduciary duties. It is essential for the White Knight to ensure that its actions are legally sound and can withstand potential legal scrutiny.

Yes, a White Knight can withdraw its acquisition proposal at any stage of the process. The decision to withdraw may be influenced by various factors, such as changes in market conditions, financial considerations, or strategic priorities. However, the White Knight should carefully assess the potential consequences of withdrawing, including potential reputational risks and legal implications.

In most cases, a White Knight cannot acquire a target company without the approval of its board of directors. The board of directors has a fiduciary duty to act in the best interests of the company and its shareholders. Therefore, the White Knight must engage in negotiations and secure the support of the target company’s board of directors to proceed with the acquisition.