White Squire

To avoid takeovers bids, some shareholder may detain a large stake of one company shares. With friendly players holding relevant positions of shares, the protected company may feel more comfortable to face an unsolicited offer. A White Squire is a shareholder than itself can make a tender offer. Otherwise it has so much relevance over the company stock composition, that can make raiders takeover more difficult or somewhat expensive. Real White Squire does not takeover the target company, and only plays as a defense strategy.

In order to defend these companies, some bankers organize funds for that specific purpose. A White Squire fund is designed to increase share participation in companies under stress. Structured to make defense positions for several corporations, till the takeover chance is on. Originated from the 80's era of junk bond takeovers, these funds workout as a rescue raider against attackers. With all the strength of private equity funds, its expertise of dealing with billion digit funding.

These ones have controversy around. One possible situation is related to specific issue of shares. The corporation joined with the White Squire can agree to make a special issue of shares, for takeover defense purpose. But if the hostile bid does not happen. Then a huge operation has been made, that probably had effects for share prices, and others shareholders position. This to not mention if is made not for a White Squire fund, but to some particular investor. This tactic is also a wide discussion today, balancing management, holding controllers, corporate governance and shareholders rights to take such decision.

Further texts:

Raiders Profile Some overview regarding raiders of corporation and their procedures to takeover