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Entry from February 13, 2011
White Squire

Entry in progress—B.P.

Wikipedia: White knight (business)
In business, a white knight, or “friendly investor” may be a corporation, or a person that intends to help another firm. There are many types of white knights. Alternatively, a grey knight is an acquiring company that enters a bid for a hostile takeover in addition to the target firm and first bidder, perceived as more favorable than the black knight (unfriendly bidder), but less favorable than the white knight (friendly bidder).

The first type, the white knight, refers to the friendly acquirer of a target firm in a hostile takeover attempt by another firm. The intention of the acquisition is to circumvent the takeover of the object of interest by a third, unfriendly entity, which is perceived to be less favorable. The knight might defeat the undesirable entity by offering a higher and more enticing bid, or strike a favorable deal with the management of the object of acquisition.

The second type refers to the acquirer of a struggling firm that may not necessarily be under threat by a hostile firm. The financial standing of the struggling firm could prevent any other entity being interested in an acquisition. The firm may already have huge debts to pay to its creditors, or worse, may already be bankrupt. In such a case, the knight, under huge risk, acquires the firm that is in crisis. After acquisition, the knight then rebuilds the firm, or integrates it into itself.

White Squire
A white squire is similar to a white knight, except that it only exercises a significant minority stake, as opposed to a majority stake. A white squire doesn’t have the intention, but rather serves as a figurehead in defense of a hostile takeover. The white squire may often also get special voting rights for their equity stake.

Investopedia
What Does White Squire Mean?
Very similar to a “white knight”, but instead of purchasing a majority interest, the squire purchases a lesser interest in the target firm.

The Free Dictionary
White squire
White knight who buys less than a majority interest.

Google News Archive
6 January 1986, Lakeland (FL) Ledger, “Mergerspeak update,” pg. 3B, col. 1:
A white knight, you’ll remember from your class in Mergerspeak 101, is a company that, at management’s request, acquires a corporation to prevent an unfriendly takeover by a third party. Now the knight has a cousin; the white squire—an investor who buys a big block of stock in a company, leaving so few shares outstanding that it would be difficult for an unwanted suitor to gain a controlling interest. What if this investor should make an untoward advance of his own? Meet the black knight.
Money Magazine

Google News Archive
14 December 1986, Eugene (OR) Register-Guard, “‘White squire’ defense against takeovers poses risk” by The Associated Press, pg. 9F, col. 1:
NEW YORK—Carter Hawley Hale Stores Inc. has shown again that an anti-takeover ploy dubbed the “white squire” ddefense holds its own risks for companies using the manuever.

The term’s name is a Wall Street derivative of the more popular “white knight” defense, where a company facing a hostile takeover attempt allows itslef to be acquired instead by a friendlier suitor.

In using the white-squire tactic, a takeover target places a large block of its shares with a “friendly” investor in order to insulate itslef from a hostile biudder.

Posted by Barry Popik
New York CityBanking/Finance/Insurance • (0) Comments • Sunday, February 13, 2011 • Permalink


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