A white knight is a bidder who makes an agreed takeover bid as an alternative to a hostile takeover bid that is already in progress.
There are a number of reasons why the directors of the target company may prefer the white knight. It may be that the white knight offers a better deal for shareholders. It may also be that the white knight offers a better deal to the directors.
While directors have a legal duty to make recommendations on the basis of shareholder's interests, there are often clear conflicts of interest when takeovers occur. See hostile takeover bid.