DEFINITION of 'Black Knight'

A black knight is a company that makes an unwelcome takeover offer for a target company. When a company is facing a hostile takeover bid, a white knight may make a friendly takeover offer that enables the target company to avoid the hostile takeover.

BREAKING DOWN 'Black Knight'

A hostile takeover may proceed via a tender offer, a proxy fight or by purchasing shares on the open market. A white knight can help the target firm by offering terms for a friendly takeover. A gray knight is a company that offers an unsolicited bid, while another company is negotiating a takeover with the target firm. A yellow knight is a company that initiated a hostile takeover but changes tactics during the process to negotiate on more agreeable terms.

RELATED TERMS
  1. Yellow Knight

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  2. Hostile Takeover

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  3. Gray Knight

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  4. Takeover Bid

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  5. Takeover

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  6. Hostile Bid

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RELATED FAQS
  1. A Hostile Takeover vs. Friendly Takeover

    Learn about the difference between a hostile takeover and a friendly takeover, and understand how proxy fights and tender ... Read Answer >>
  2. How can a company buy back shares to fend off a hostile takeover?

    Learn about why a business might use a stock buyback to thwart a hostile takeover attempt by reducing its total assets and ... Read Answer >>
  3. What is a staggered board?

    A staggered board of directors (also known as a classified board) is a board that is made up of different classes of directors. ... Read Answer >>
  4. Why is a shareholder rights plan called a "poison pill?"

    Discover why shareholder rights plans are often called "poison pills" to fight hostile takeovers and give smaller corporations ... Read Answer >>
  5. How companies' stocks move during an acquisition?

    During an acquisition, there's a short-term impact on the stock prices of both companies. Typically, the target company's ... Read Answer >>
  6. What are some prominent examples of hostile takeovers?

    Learn about some of the largest hostile takeovers in history, including the KKR acquisition of RJR Nabisco and the Vodafone ... Read Answer >>
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