In business, a white knight may be a corporation, a private company, or a person that intends to help another firm.They help the firms who face a potential risk of being taken over.When a hostile bid is made by the acquiring company, the target company looks for another company which is more suitable for it.They negotiatie with this third company for taking it over inorder to escape from being taken over by the bidding company.By doing so, they also enter into a contract of avoiding the lay offs.At the same time, they may give only a part of stake to the white knight retaining the major controlling stake.
There are many types of white knights-unfriendly or friendly. 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).
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