White Knight
A friendly acquirer that rescues a target company from a hostile takeover by offering better terms or a preferred deal structure.
What is White Knight?
A white knight is a company or individual that acquires a target company facing a hostile takeover, offering an alternative that the target's board considers more favorable than the hostile bid. The target's management prefers the white knight because it typically offers better terms, agrees to retain existing management, or aligns better with the target's culture and long-term strategy. A variant, the white squire, does not acquire the entire company but buys a large stake to dilute the hostile bidder's voting power. White knight defenses sometimes trigger bidding wars that ultimately benefit target shareholders by driving up the acquisition price. However, critics note that white knight deals can entrench underperforming management at shareholders' expense.
Example
When InBev launched a hostile bid for Anheuser-Busch in 2008, Anheuser's board sought alternative buyers. Although no white knight emerged, the company eventually accepted InBev's sweetened offer of $70 per share for $52 billion — up from the initial $65 offer — showing how the threat of seeking a white knight can extract a higher price even without one materializing.
Source: SEC — Mergers and Acquisitions