Definition

The act of purchasing a large amount of a company's shares to create a threat of takeover, then selling those shares back to the company for a higher price than what they are worth.

Example

The investor engaged in greenmail to profit from the company's fear of a takeover.

Conversation

Have you heard about the term greenmail?

Yeah, I read something about it recently. It's about stock buybacks, right?

Exactly! Companies pay a premium to avoid a takeover through greenmail.

It's kind of a shady tactic, but I guess it makes sense in the corporate world.

Synonyms & Antonyms

Root Explanation

Greenmail is a portmanteau formed from "green" (meaning the color associated with money) and "blackmail" (from Old English "mæl", meaning a payment or tribute). The term refers to a practice where a company buys back its shares at a premium to prevent a hostile takeover, thus relating to financial coercion.

Memory Tip

Think of 'green' representing money and 'blackmail' as a form of coercion — greenmail is essentially using money to prevent a takeover.

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