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. White Knight

    A white knight is an individual or company that acquires a corporation ...
  2. Takeover

    A corporate action where an acquiring company makes a bid for ...
  3. Whitemail

    A strategy that a takeover target uses to try and thwart an undesired ...
  4. "Just Say No" Defense

    A strategy used by corporations to discourage hostile takeovers ...
  5. Takeover Artist

    An investor or company whose primary goal is to identify companies ...
  6. Hostile Takeover Bid

    A hostile takeover bid occurs when an entity attempts to take ...
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