White Squire - Explained
What is a White Squire?
Written by J. Mance Gordon
Updated at April 20th, 2024
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What is a White Squire?
A white squire is an individual or a friendly firm that saves the target company from a hostile takeover by acquiring a stake in it. This approach is almost similar to that of the white knight pattern. Unlike the white knight, the target firm doesn't have to compromise with its independence or authority as the white squire just purchases a small portion of shares in the firm.
What does a White Squire Do?
A white squire refers to a friendly acquisition that doesn't have any interests of owning the firm. It ensures that it can block the bidding firm with its stake, and further, offer the target firm an option to review its plan. In return, the white squire may become a board member, receive shares at a discounted price, or get dividends.
When the unfriendly acquirer or the black knight takes his bid back, the white squire will prefer selling its shares. For avoiding any switching related conflicts ahead, the target company can formulate the contract in such a manner that the shares of the white squire wont serve any purpose to the hostile bidding firm.