greenmail

play
noun green·mail \ ˈgrēn-ˌmāl \
Updated on: 26 Jul 2017

Definition of greenmail

:the practice of buying enough of a company's stock to threaten a hostile takeover and reselling it to the company at a price above market value; also :the money paid for such stock

greenmail

transitive verb

greenmailer

play \ˈgrēn-ˌmā-lər\ noun

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Recent Examples of greenmail from the Web

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.

First Known Use of greenmail

1983


Financial Definition of GREENMAIL

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.


Law Dictionary

greenmail

play
noun green·mail \ ˈgrēn-ˌmāl \

legal Definition of greenmail

:the practice of buying enough of a company's stock to threaten a hostile takeover and reselling it to the company at a price above market value; also :the money paid for such stock

greenmail

transitive verb

greenmailer

noun

Origin and Etymology of greenmail

green (money) + -mail (as in blackmail)


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