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Trading and Investment Terminology

Yellow Knight

Yellow knight is a company or corporation which is once planning a hostile takeover attempt on a company but instead decide to propose a merger deal to the target company. Means if you cannot beat a company then better to join it. There might have many reasons to do for backing out but most of the time the company realize that target Company has a better defense mechanism and it will cost more to take over the company so they change the strategy and go for a merger. Because of this condition, the bargaining power of yellow knights may reduce but the merger can give them better yield. In merger and acquisitions (M&A) various colored knights such as black knight, white knight, gray knight are used to identify the nature of the takeover