Green mail investopedia

A great topic!

In finance, "green mail" is a term used to describe a type of hostile takeover bid where a company's largest shareholder or a group of investors, often with a significant stake in the company, makes a tender offer to buy out the remaining shares of the company at a price that is higher than the current market price.

The term "green mail" was coined because the offer is often made in a "green" or "friendly" manner, with the intention of acquiring control of the company without resorting to a full-blown hostile takeover. The goal is to avoid a protracted and costly battle for control, which can be damaging to the company's reputation and operations.

Here are some key characteristics of green mail:

  1. Friendly takeover: The offer is made by a company's largest shareholder or a group of investors who already have a significant stake in the company.
  2. Higher price: The offer price is typically higher than the current market price of the company's shares.
  3. Tender offer: The offer is made through a tender offer, where shareholders are invited to sell their shares to the bidder at the offered price.
  4. Control: The bidder aims to acquire control of the company, often to influence its strategic direction or to realize a profit from the increased value of the company's shares.

Green mail can be an attractive option for companies that are facing a hostile takeover bid, as it allows them to avoid a costly and distracting battle for control. However, it can also be a way for large shareholders to exert their influence over the company and potentially benefit from the increased value of their shares.

Examples of green mail include:

Overall, green mail is a strategic move that can be used to acquire control of a company without resorting to a full-blown hostile takeover.