The white knight defence converts an unwanted approach into an auction. The board shops the company to a buyer it considers a better fit, often one that will keep management or the business intact. Sometimes the friendly bid is lower in price but preferred for other reasons, which is where shareholders and boards can disagree.
A related variant, the white squire, takes a large minority stake rather than the whole company, blocking the hostile bidder without a full sale.
Example: a hostile bid arrives at $50. The board finds a friendly buyer at $54, a 8% improvement worth $400M on an 100M share company, and the hostile bidder either raises or walks.
Related: hostile-takeover, poison-pill, acquisition, deal-premium