The definition of a ‘White squire’
A white squire is a friendly investor or company that buys the shares of the target company to prevent a hostile takeover. It’s like a white knight defense, with the exception of target, the firm will not abandon its independence, as it comes with a white knight, because white squire only buys part of share in the company.
Breaking down the ‘White squire’
A white squire is a friendly acquirer that does not require a controlling stake of a white horse. Your package is large enough to block the auction of the company, and gives the target time to rethink your strategy. White squire can be given a place on the Board, offer discounts or promotions are promised generous dividends as an incentive to make a deal.
After the unfriendly acquirer withdrew its bid, white squire, as a rule, to sell their shares. To prevent a change in mindset in the future, the transaction can be structured so that the shares given the white squire cannot be charged with hostile price.
An example of a white squire defense
An example of a white squire defense happened when America Movil, owned by Mexican billionaire Carlos slim, tried to buy the Dutch telecoms company kpn in 2013. Independent Fund entrusted with the protection of the CPN was able to block it.
Other means of protection from hostile takeover include poison pills, greenmail, PAC-man defense and the boards staggered, and qualified majority rules.