This time it was
a White Knight. He drew up at Alice's side, and tumbled off his horse just as the Red Knight had done: then he got on again, and the two Knights sat and looked at each other for some time without speaking.
Through the Looking Glass
Fortunately, it is also a story of a dramatic rescue through the combined efforts of skilled professionals, government agencies,
a white knight and a proactive financial institution.
Banking on a white knight: Jersey City co-op turns around
To be classified as a white knight, the bidder must meet both of the following criteria:
If management usually makes good decisions, it will probably also make good decisions when it makes a bid as a white knight. Tobin's q indicates the cumulative effect of many decisions; the CARs for the firm indicate the efficiency of the decision to bid on the target.
The performance of white-knight management
If the target's board determines a takeover is not in shareholders' best interests, defensive measures generally are taken, possibly including the search for a white knight.
The central tax issue is whether the costs of defending against a hostile takeover or facilitating a white knight acquisition are deductible.
unsuccessful search for a white knight were deductible in the year the search was abandoned.
A target corporation arranged to be acquired by a white knight as a hostile takeover defense.
Takeover expenses: National Starch and the IRS add new wrinkles
The IRS concluded that the Tax Court's reasoning in National Starch was equally applicable with respect to costs incurred in the successful search for a white knight. In requiring the takeover defense expenses to be capitalized, the IRS offered the following explanation:
Once a decision has been made to seek out a white knight, any subsequent costs would be capital in nature under the Tax Court's reasoning in National Starch.
Takeover defense expenditures: deductibility not necessarily precluded by National Starch
If this were a medieval fable, in face of this hopeless situation, one could look forward only to
a white knight on his steed galloping to the rescue.
Co-op in search of the White Knight
Clearly, under the hypothesis that white knights systematically overbid, becoming a white knight does not serve the interests of the bidder's shareholders.
Another view of white knights is advanced by Shleifer and Vishny |24~, who present a model in which acquisition by a white knight represents the optimal synergistic combination of target and bidding firm assets (termed the "maximum synergy hypothesis" in this study).
First, acquisition by a white knight does not result in significantly different synergy than acquisition by a hostile bidder.
An empirical examination of white knight corporate takeovers: synergy and overbidding
This required an explicit reference in the responsible financial press to the bidder as
a white knight.
Wealth reduction in white knight bids