Definition - What does White Squire mean?
A white squire is an investor who buys stakes in a company in the best interest of that company, usually with the intent to prevent a hostile takeover of that company. White squires only acquire a partial share of the company which does not give them complete controlling power. However, this partial interest is enough for said company to avoid a hostile takeover. In some cases, it may also give the company some time to rethink its strategy. White squires give confidence to the company to face any unfavorable takeovers and, in this sense, act as a savior.
Divestopedia explains White Squire
White squires are similar to white knights in that both are allies to the company and they are both involved in defeating a hostile takeover. However, a major difference between the two is that white knights acquire a major share while white squires acquire a minor share.
The idea behind the role of white squires is to prevent the advances of black knights. The objective of black knights is to take control over a company against the wishes of the current owners or management by using legal means. To avoid this advancement, a white squire takes a substantial block of shares and allies with the current owners as the majority shareholders in order to reduce the amount of shares available for purchase thereby blocking the black knight from taking controlling power.
Despite the benefits that come from having a white squire, there are also some risks. Over time, the white squire may get unhappy with the current management and can switch allegiances. They can team with black knights, thereby increasing the chance of a successful hostile takeover. For this reason, current owners evaluate carefully before choosing a white squire for their company and they prefer to pick individuals or institutions that are steadfast in their approach. However, this careful evaluation does not rule out the risk, but simply mitigates it.