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Investments glossary

Greenmail

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Quotes of the day:

Those noble men who falsehood dread In wealth and glory ever grow, As flames with greater brightness glow With oil in ceaseless flow when fed.

— Sanskrit Proverb

Greenmail is the practice of buying enough shares in a company to threaten a hostile takeover so that the target company will instead repurchase its shares at a premium. Regarding mergers and acquisitions, the greenmail payment is made as a defensive measure to stop the takeover bid. The target company is forced to repurchase the stock at a substantial premium to thwart the takeover, which results in a lucrative profit to the greenmailer.


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