What it is:
A white knight is a company that acquires another company that is trying to avoidby a third party.
How it works/Example:
For example, let's assume that Company XYZ wants to acquire Company ABC. Company ABC feels that Company XYZ is a hostile bidder and
Company 123, which has worked with Company ABC for years and has a good relationship with its board, sees an opportunity to "save" Company ABC from the tense situation and make a lucrative at the same time. Company ABC welcomes Company 123's bid and merges with it to avoid by Company XYZ. Company 123 is a white knight.
Why it matters:
White knights make acquisitions on friendly. White knights are white because they are associated with goodness and virtue.