GREEN MAIL

Today's word: GREEN MAIL
Theme for this fortnight: MERGERS & ACQUISITIONS

 

An antitakeover measure that arises when a large block of stock is held by an unfriendly company that is threatening a hostile takeover. Greenmail is a term that applies to mergers and acquisitions, and refers to the money that is paid by the target company to another company, known as a corporate raider, that has purchased a majority of the target company's stock. The greenmail payment is made in an attempt to stop the takeover bid. The target company is forced to repurchase the stock at a substantial premium (the greenmail payment) to prevent the takeover. This is also known as a "bon voyage bonus" or a "goodbye kiss."