Economic consequences of takeovers are investigated by analyzing profitability of enterprises acquired a s a direct or indirect ("white knight") consequence of tender offer s. Target companies' pre-tender profitability averaged 0.97 percentag e points below peer industry norms. Nine years after takeover, acquir ed lines of business had operating income/assets percentages 3.10 poi nts below those of non-tender lines with similar industry bases, mark et shares, and merger accounting methods. Most of the targets' postta keover profit decline stemmed from asset value writeups. There is no indication that on average the acquirers raised their targets' operat ing profitability, net of merger-related accounting adjustments. Copyright 1987 by Blackwell Publishing Ltd.