White Knight Offer

Posted in Operations and Supply Chain Terms, Total Reads: 1094
Advertisements

Definition: White Knight Offer

It is a bid or an offer given to a company which is under a threat of a hostile takeover .the company being taken over  due to  non payment of debt or on the verge of bankruptcy. The hostile company is termed as a black knight . However the rescuer in this case is the white knight.  The white knight is seen as a savior who  seems to be going  for a gentle takeover.

It can be an individual or a group who offer a favorable proposition of  retaining the same employees  and equally well compensating .  The white knight  acts as a savior by

  • Acquiring the minority of share holding rights  which can  prevent their rival from having a power in their decision making
  • Transferring profits from their parent firm to  help in resurrecting the weaker firm

However there is not always a good intention of taking over as

 

  • During a takeover the firm is also taking a prevailing debt on itself. It needs to generate the  profits for all the investment it has  put in .
  • It  also has to do with providing enough capital to their clients which the previous firm failed to  provide . Hence providing the necessary  momentum in  churning  the static economy.
  • They look for the opportunity of  stripping of a rival which could have been  a threat during its flourishing period.

 

Example:

Bank  of America  acted as a savior for acquiring countrywide  financial.

  • Although with debt levels of 1000 million dollars the risk was seen to be very high but  it also gave the opportunity of  stripping of a rival which could have been  a threat during a healthy period.

 

Hence, this concludes the definition of White Knight Offer along with its overview.

Advertisements

Browse the definition and meaning of more terms similar to White Knight Offer. The Management Dictionary covers over 7000 business concepts from 6 categories.

Search & Explore : Management Dictionary



Share this Page on: