White Squire

A white squire is an investor or friendly company which buys a stake in a target company to prevent a hostile takeover. This is similar to a white knight defense, except the target firm does not have to give up its independence as it does with the white knight, because the white squire only buys a partial share in the company.

A white squire is a friendly acquirer which does not require a controlling interest like a white knight does. Its stake is just large enough to block the bidding company, and gives the target company time to rethink its strategy. The white squire may be given a seat on the board, offered discounted shares or promised generous dividends, as an incentive to do the deal.

Once the unfriendly acquirer has withdrawn its bid, the white squire will typically sell its shares. To prevent it from switching allegiances in the future, the deal may be structured so that the shares given to the white squire may not be tendered to the hostile bidder.

An example of the white squire defense occurred when America Movil, owned by Mexican billionaire Carlos Slim, attempted to purchase Dutch telecoms company KPN in 2013. An independent foundation entrusted with protecting KPN was able to block it.

Other takeover defenses include poison pills, greenmail, the pac-man defense, creating staggered boards and supermajority rules.