Yellow Knight


DEFINITION of 'Yellow Knight'

A company that was once making a takeover attempt but ends up discussing a merger with the target company. Yellow knights have various reasons for backing out of the takeover attempt, but frequently are attributable to the target company's ability to fend off takeover. The "yellow" in "yellow knight" may refer to the color's association with cowardice. Since a yellow knight backs down from a takeover attempt and retreats to merger discussions, a yellow knight may be viewed as weak.

BREAKING DOWN 'Yellow Knight'

In mergers and acquisitions (M&A), various colored knights are used to identify the nature of a takeover or potential takeover. A black knight is a company that makes a hostile takeover offer for the target company. A white knight makes a friendly takeover offer to a target company that is being faced with a hostile takeover. A gray knight (sometimes spelled grey knight) is a second unsolicited bidder in a corporate takeover.

  1. Lobster Trap

    A strategy used by a target firm to prevent a hostile takeover. ...
  2. Dawn Raid

    When a firm or investor buys a substantial number of shares in ...
  3. Black Knight

    A company that makes a hostile takeover offer for a target company. ...
  4. White Knight

    A white knight is an individual or company that acquires a corporation ...
  5. Gray Knight

    A second, unsolicited bidder in a corporate takeover. A gray ...
  6. Hostile Takeover

    The acquisition of one company (called the target company) by ...
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