Listen to a Business English Dialogue About White knight
Lydia: Hi Lawrence, have you ever heard the term “white knight” in business?
Lawrence: Yes, Lydia, I have. A “white knight” is a company or individual that rescues another company from a hostile takeover by offering a more favorable acquisition deal.
Lydia: That’s correct. Can you explain how a white knight typically operates?
Lawrence: Certainly, Lydia. A white knight may enter into negotiations with the target company’s management to propose a friendly takeover or merger agreement that is more acceptable to the target company’s board and shareholders than the hostile bid.
Lydia: I see. What are some reasons why a company might seek out a white knight?
Lawrence: One reason is to protect the interests of the company’s stakeholders, including employees, customers, and shareholders, by avoiding a takeover by a hostile bidder who may not have the company’s best interests at heart.
Lydia: That makes sense. Are there any potential drawbacks to becoming a white knight?
Lawrence: Yes, Lydia. Becoming a white knight can be expensive and may require the company to take on additional debt or issue new equity to finance the acquisition, which could impact its financial health and shareholder value.
Lydia: I understand. How do investors and analysts typically view white knight transactions?
Lawrence: Investors and analysts often view white knight transactions positively, as they can help preserve the stability and independence of the target company, while also potentially creating value for shareholders through synergies and strategic benefits.
Lydia: Thanks for explaining, Lawrence. White knight maneuvers seem like an important aspect of corporate strategy in the face of hostile takeovers.
Lawrence: Absolutely, Lydia. They can play a crucial role in protecting companies from hostile takeovers and ensuring the long-term viability of the business.