what is a yellow knight 
a yellow knight is a company that was orchestrating a hostile takeover attempt but then backs out of it and proposes a merger of equals with the target company instead understanding a yellow knightvarious colored knights are used to identify the nature of a takeover or potential takeover the process where a company tables an offer to assume control of or acquire another yellow knights are the ones that start out aggressively seeking to purchase a company against its management s wishes and then experience a change of heart back down and propose joining forces in a merger instead yellow knights are a case of if you can t beat them join them they might have any number of reasons for backing out of the takeover attempt often they simply realize that the target company is going to cost more and or has better takeover defenses than they thought and that they need to change strategy a stern rejection might leave the yellow predator in a weak bargaining position and lead it to conclude that a friendly merger is the only reasonable option it has left on the table to get hold of the target s assets in a complete u turn the yellow knight goes from attempting to bully the target into submission and swallow it up to proposing that they team up together as an equal force 