Yellow Knight

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Lobster Trap

    A strategy used by a target firm to prevent a hostile takeover. ...
  2. Gray Knight

    A second, unsolicited bidder in a corporate takeover. A gray ...
  3. White Knight

    A white knight is an individual or company that acquires a corporation ...
  4. Black Knight

    A company that makes a hostile takeover offer for a target company. ...
  5. Dawn Raid

    When a firm or investor buys a substantial number of shares in ...
  6. Hostile Takeover

    The acquisition of one company (called the target company) by ...
RELATED FAQS
  1. If a company offers a buyback of its shares, how do I decide whether to accept the ...

    Tender offers for share buybacks are often made at a premium to the current market price; it may be in an investor’s best ... Read Full Answer >>
  2. How is a tender offer used by an individual, group or company seeking to purchase ...

    A tender offer is made directly to shareholders in a publicly traded company to gain enough shares to force a sale of the ... Read Full Answer >>
  3. Why would it be in the interest of shareholders to accept a tender offer?

    It would be in the best interests of shareholders to accept a tender offer if it is well above the current market price – ... Read Full Answer >>
  4. How does a company record profits using the equity method?

    A company that invests in another company and has majority control of it would record profits using the equity method. This ... Read Full Answer >>
  5. What usually happens to the price of a stock when a tender offer for shares of the ...

    Usually, the price of a stock rises when a tender offer for shares of the company is made public. A tender offer is an offer ... Read Full Answer >>
  6. How does horizontal integration allow companies to share resources?

    In a horizontal integration, a company either acquires another company or merges with that company. This allows the resulting ... Read Full Answer >>
Related Articles
  1. Bonds & Fixed Income

    War's Influence On Wall Street

    Blitzkrieg? Dawn raids? Sounds like the markets and the battlefield have a few things in common.
  2. Fundamental Analysis

    Mergers And Acquisitions: Understanding Takeovers

    In the dramatic world of M&As, battleground terms meld with bizarre metaphors to form the language of the game.
  3. Options & Futures

    Bloodletting And Knights: Medieval Investment Terms

    From bloodletting to ye olde black knights, things on Wall Street are getting downright medieval!
  4. Economics

    Failed Takeovers During The Recession

    Takeover attempts were popular in late 2008 to 2009, but some deals just didn't make it.
  5. Options & Futures

    Reverse Mergers: The Pros And Cons

    Reverse mergers can provide excellent opportunities for companies and investors, but there are still some downsides and risks.
  6. Mutual Funds & ETFs

    Corporate Takeover Defense: A Shareholder's Perspective

    Find out the strategies corporations use to protect themselves from unwanted acquisitions.
  7. Options & Futures

    Pinpoint Takeovers First

    Use these seven steps to discover a takeover before the rest of the market catches on.
  8. Bonds & Fixed Income

    Trademarks Of A Takeover Target

    These tips can lead you to little companies with big prospects.
  9. Economics

    What are Deliverables?

    Deliverables is a project management term describing an object or function that must be provided or completed by a certain due date.
  10. Investing

    How To Profit From M&A Announcements

    We look at four strategies that seek to profit from merger and acquisitions announcements.

You May Also Like

Hot Definitions
  1. Bund

    A bond issued by Germany's federal government, or the German word for "bond." Bunds are the German equivalent of U.S. Treasury ...
  2. European Central Bank - ECB

    The central bank responsible for the monetary system of the European Union (EU) and the euro currency. The bank was formed ...
  3. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
  4. Current Account Deficit

    A measurement of a country’s trade in which the value of goods and services it imports exceeds the value of goods and services ...
  5. International Monetary Fund - IMF

    An international organization created for the purpose of: 1. Promoting global monetary and exchange stability. 2. Facilitating ...
  6. Risk-Return Tradeoff

    The principle that potential return rises with an increase in risk. Low levels of uncertainty (low-risk) are associated with ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!