Fortunately, it is also a story of a dramatic rescue through the combined efforts of skilled professionals, government agencies, a white knight
and a proactive financial institution.
Clearly, under the hypothesis that white knights systematically overbid, becoming a white knight does not serve the interests of the bidder's shareholders.
Another view of white knights is advanced by Shleifer and Vishny |24~, who present a model in which acquisition by a white knight represents the optimal synergistic combination of target and bidding firm assets (termed the "maximum synergy hypothesis" in this study).
First, acquisition by a white knight does not result in significantly different synergy than acquisition by a hostile bidder.
Becoming a white knight in no way guarantees success: 10 (20%) of the white knights in the bidder sample were unsuccessful.
If the target's board determines a takeover is not in shareholders' best interests, defensive measures generally are taken, possibly including the search for a white knight.
The central tax issue is whether the costs of defending against a hostile takeover or facilitating a white knight acquisition are deductible.
unsuccessful search for a white knight were deductible in the year the search was abandoned.
The IRS concluded that the Tax Court's reasoning in National Starch was equally applicable with respect to costs incurred in the successful search for a white knight.
Once a decision has been made to seek out a white knight, any subsequent costs would be capital in nature under the Tax Court's reasoning in National Starch.
If this were a medieval fable, in face of this hopeless situation, one could look forward only to a white knight
on his steed galloping to the rescue.
This prospective antitakeover strategy of acquisitions by white knights then becomes consistent with the immediate anti-takeover strategy of the target firm of inviting a white knight to fend off the unwelcome hostile bidder.
This required an explicit reference in the responsible financial press to the bidder as a white knight.
In such situations, our definition of a white knight is not met since the white knight bid is not subsequent.