White Squire

Author:

Reviewed By:

Last Updated:June 13, 2024

In This Article

What is a White Squire?

A white squire is a financial backer or well-disposed organization that purchases a stake in an objective organization to forestall a threatening takeover.

An investor or friendly corporation that purchases stock in a target business in order to thwart a hostile takeover is known as a "white squire." This is comparable to a white knight defense, but since the white squire just purchases a portion of the business, the target corporation does not have to give up its independence as it would with a white knight.

Unlike a white knight, a white squire is a conciliatory acquirer who does not demand a controlling interest. A white knight purchases the entire business in order to prevent a hostile takeover. A white suit purchases a portion of the business.

Their stake is precisely big enough to prevent the bidding business from moving further and give the target company time to reconsider its plan. As an inducement to complete the purchase, the white squire might be promised large dividends, reduced shares, or a position on the board.

Key Takeaways

A white squire is a friendly investor or company that purchases a minority stake in a target company to thwart a hostile takeover attempt.
This term is often used in the context of mergers and acquisitions (M&A) when a company facing a hostile bid seeks to dilute the ownership of the hostile bidder by selling a portion of its shares to a friendly party.
The primary purpose is to dilute the ownership of the hostile bidder and make it more difficult for them to gain control of the target company.
The white squire's investment may require regulatory approval, depending on the jurisdiction and industry involved.

How A White Squire Hostile Takeover Works

A white assistant is a well-disposed acquirer who doesn't need a controlling interest like a white knight.

A white knight purchases the whole organization to battle off an unfriendly takeover. A white assistant purchases part of the organization. Their stake is sufficiently enormous to impede the offering organization and gives the objective organization time to reconsider its technique.

The white assistant might be given a seat on the board, offered limited shares, or guaranteed liberal profits as a motivating force to make the arrangement. The white assistant will normally sell its portions when the antagonistic acquirer has removed its offer.

To keep it from exchanging loyalties later on, the arrangement might be organized with the goal that the offers given to the white assistant may not be offered to the antagonistic bidder.

The same happens when a firm seeks candidates for recruitment. They look after their expertise and choose the best one out of all who is suitable for this job but with limited investment.

They always look for your skill set and choose the best person who requires the least training investment.

Example of a White Squire

An illustration of the white assistant safeguard happened when America, possessed by Mexican very rich person Carlos Slim, endeavored to buy the Dutch telecoms organization KPN in 2013.

An autonomous establishment endowed with safeguarding KPN had the option to obstruct it. Before, The Walt Disney Company and CBS utilized white assistants to assist with staying away from takeovers. CBS recently had Loews Corp. take a 25% stake in the organization to forestall a takeover by Ted Turner.

In any case, at last, Loews was not content with CBS the executives and forced the seat of CBS' board to leave. While a white assistant is intended to be a positive presence for the designated organization, they can work on changing if they see their issues.

Other takeover safeguards incorporate death wishes, greenmail, the Pacman guard, making staggered sheets, and supermajority rules. White assistants are like white knights in that both are partners to the organization and are engaged in overcoming a threatening takeover.

Nonetheless, a significant contrast between the two is that white knights procure an effective offer while white assistants gain a minor offer. The thought behind the white knight assistants' job is to forestall dark knights' advances.

The goal of dark knights is to assume command of an organization against the desires of the ongoing proprietors or executives by utilizing legitimate means.

To stay away from this headway, a white assistant takes a significant block of offers and partners with the ongoing proprietors as the more significant part investors to diminish how many offers are accessible for buy, consequently impeding the dark knight from taking controlling power.

Special Considerations

An agreeable acquirer who doesn't require a controlling interest, as a white knight does, is known as a white squire. With past profits and limited shares, white assistants can likewise get different advantages, like a seat on the board.

This is finished to guarantee the white assistant sides with the objective organization and doesn't adjust their perspectives.

As a feature of this, an understanding is typically inked, requiring a white assistant to cast a ballot for the objective organization. Welcoming a white assistant on board can help, but later on can hurt the organization, as they presently have halfway control of the organization.

Consequently, organizations might uphold a stop understanding, which keeps a white assistant financial backer from bringing their stake up in the organization.

An agreement is generally signed, as a result of this, that calls for a white assistant to vote in favor of the impartial organization. Accepting a white assistant can be beneficial, but while they currently hold only partial influence over the business, it may later prove detrimental.

It's similar to a general bailout offer. Still, suppose the company's management isn't receptive to a sale offer. In that case, the buyer may directly offer shareholders to purchase their shares generally at a price higher than the market price to complete a hostile takeover.