Published by BSIC on 4 April 2021
White Knight Defense
The white knight defense is a strategy that involves the acquisition of a target company by a partner company, called a “white knight”, as it is friendly to the target. Typically, the white knight agrees to pay a premium above the acquirer’s offer or agrees to a restructuring supported by the target company’s management. This is generally a strategy of last resort. The target company accepts the fact of being taken over, but can at least opt to be taken over or merged with a friendly company, as opposed to being the victim of a hostile takeover. The company sees the friendly bidder as a strategic partner, one who will likely keep the current management in place and who will provide shareholders with better value.
How does it work?
Company B rejects the bid offer.
After its offer is rejected, Company A attempts a hostile takeover of Company B. It is now cast in the role of a black knight.
Company C sees that Company B is undergoing a hostile takeover attempt by Company A.
Company C offers to buy Company B by offering better takeover terms and a promise to retain the current management team and preserve the company’s core business. It is now acting as a white knight.
In 2008, global investment bank Bear Stearns sought a white knight after facing catastrophic losses during the global credit crisis. The company’s market capitalization had declined by 92%, making it a potential target for a takeover and vulnerable to bankruptcy. White knight JPMorgan Chase & Co. agreed to purchase Bear Stearns for $10 a share. While this was a far cry from the $170 a share the company traded for just a year earlier, the offer was up from the $2 a share JPMorgan initially offered shareholders.
Posted from SLPRO Z
闫鹏和律师（Harvey YAN），中银律所总所高级合伙人（北京），毕业于北京大学法学院，获得法学硕士学位，并先后在伦敦政治经济学院和帝国理工大学读完并购和经济课程。担任中国并购公会并购专家委员会委员，中国国际商会专家委员会委员，全国工商联法律维权律师团成员，曾被中国并购公会授予“最佳并购律师”荣誉称号，荣膺“2022品牌影响力·十大领军人物”。
闫鹏和律师不仅精通国内外投资并购法律政策和实务技能，而且拥有杰出的商业智慧和经济头脑，兼有深厚资源和全球视野，服务过众多知名客户和有影响力的大型项目，擅长处理综合性疑难交易和重大复杂案件，拥有十分良好的口碑和信誉，是深受欢迎的法商融合专家型律师。
