How Do You Spell GREENMAIL?

1. Greenmail refers to a strategic maneuver in the financial world where a person or entity purchases significant amounts of a company's stock, with the intention of pressuring the company into purchasing the shares back at a premium in order to avoid a hostile takeover. It is an aggressive tactic commonly employed by corporate raiders or individuals seeking to make a profit.

   The term "greenmail" is composed of two parts: "green" referring to the money or profits sought, and "mail" originating from the concept of blackmail, metaphorically signifying the coercive nature of the tactic itself. Greenmail is considered to be a form of corporate blackmail, as it involves a threat to the company's management or board of directors – either buy back the shares at a premium or risk losing control and being taken over by an unwanted acquirer.

   To execute a greenmail strategy, the individual or entity first acquires a significant amount of the company's shares, typically at a price below market value. Then, they announce that they are contemplating a hostile takeover. This announcement puts pressure on the target company, as it potentially causes a decline in stock price and could lead to a loss of confidence from other shareholders or investors. In response, the target company may choose to repurchase the shares from the greenmailer at a higher price, thus negating the takeover threat. This repurchase is typically at a premium, providing the greenmailer with a profit.

   Greenmail is often criticized for its ability to benefit a select few at the expense of other shareholders, as it artificially inflates the stock price and dilutes the value of the remaining shares. Though legal and occasionally profitable for the greenmailer, it is generally seen as an unethical business practice.

Common Misspellings for GREENMAIL

The word "greenmail" is a blend of two words: "green" and "blackmail".

The term was first used in the 1980s during a series of hostile takeover attempts in corporate America. It refers to a strategy where a company would buy a substantial amount of another company's stock with the intention of forcing the target company to repurchase the stock at a premium, thereby avoiding the takeover threat.

"Green" in "greenmail" refers to the potential financial gain or profit that the purchasing company seeks to achieve through this strategy. It is similar to the concept of "green" as a reference to money or financial success.

"Blackmail" is the act of demanding or extracting money or favors from someone by threatening to reveal certain information or take harmful action.

Similar spelling words for GREENMAIL

Plural form of GREENMAIL is GREENMAILS