Definition - What does Yellow Knight mean?
A yellow knight refers to a company that attempted a hostile takeover of another company, but opted to merge the company instead as a result of a change in strategy. The color yellow implies cowardice, which in this case refers to the act of retreating from the attempted takeover.
Divestopedia explains Yellow Knight
There might be several reasons why an acquiring company is discouraged from proceeding with its hostile takeover. The business initiating the takeover may have come to a decision that their approach is no longer possible. For example, perhaps the acquiring party realizes partway through the takeover that more resources than initially anticipated are needed to close the deal. In such cases, the targeted company may have already manipulated its strategic plan in order for the takeover not to happen.
If, in any case, there is a valid rationale to continue with the takeover, the method of taking over the targeted company may involve a gentler approach that's favorable to both parties.