greenmail was our Word of the Day on 12/08/2014. Hear the podcast!
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Recent Examples of greenmail from the Web
That comes out to an obscene $225,000 per job for factory work, proving that neither party, and few states, can control the scourge of corporate greenmail.
These example sentences are selected automatically from various online news sources to reflect current usage of the word 'greenmail.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.
Did You Know?
Greenmail is a recent English coinage, but its history spans a millennium. In the Anglo-Saxon historical records for 1086, we find an early use of a word that still survives in Scottish English as mail, meaning "payment" or "rent." The 16th century saw the appearance of the compound blackmail, which was originally a tribute that freebooting chiefs at the Scottish border exacted in exchange for immunity from pillage. In 1862, the U.S. government began printing paper money using green ink, and soon the word green came to suggest money. Finally, in the 1980s, greenmail was coined by combining green and blackmail to describe a particular type of financial piracy.
Financial Definition of GREENMAIL
What It Is
Greenmail is an acquisition tactic whereby the acquirer attempts to obtain a controlling interest in a target by buying shares at a premium from the target's shareholders.
How It Works
Let's assume an entity that Company XYZ considers unsavory (we'll call it Party X) is attempting to acquire control of Company XYZ by offering to buy shares at a premium from Company XYZ's shareholders.
To avoid being purchased by Party X, Company XYZ's board of directors might offer to purchase Party X's shares for a price above the current market price. This of course makes Party X go away (and a lot richer, by the way), but the transaction can also be construed as Party X blackmailing (or greenmailing) Company XYZ by threatening to take over the company if it does not pay a particular premium to Party X.
Why It Matters
To avoid this situation, in which Company XYZ might make an offer to repurchase shares at a price above what other shareholders might get, anti-greenmail provisions exist. These provisions generally state that if Company XYZ pays a premium to repurchase shares, it must offer that premium to all shareholders. An anti-greenmail provision is a clause in a corporation's charter that deters the corporation's board from conducting a stock buyback.
Company XYZ does this in exchange for Party X's agreement not to attempt to acquire the company for a period of time. Anti-greenmail provisions are attempts to thwart takeover threats from speculators, disruptive shareholders, and other "unsavory" entities that are seeking a payoff rather than a genuine business relationship. In general, a corporation's shareholders must vote to adopt or abandon anti-greenmail provisions.
legal Definition of greenmail
Origin and Etymology of greenmail
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