Greenmail raids meaning
A blast from the past!
"Greenmail raids" is a term that was popularized in the 1980s, particularly in the context of corporate takeovers and hostile acquisitions.
In the 1980s, corporate raiders, also known as "greenmailers," would target undervalued or underperforming companies, often with the intention of taking control of the company and selling off its assets for a quick profit. These raiders would typically use a combination of financial leverage, such as high-yield debt, and aggressive tactics, such as proxy fights and hostile takeovers, to gain control of the company.
The term "greenmail" comes from the idea that the raiders would "greenmail" the company, or extract a ransom from the company's shareholders in exchange for not taking over the company. This could involve the raiders selling their shares back to the company at a higher price than they originally paid, or receiving a payment from the company to drop their takeover bid.
Some notable examples of greenmail raids include:
- The 1985 takeover of RJR Nabisco by Kohlberg Kravis Roberts (KKR), which was later immortalized in the book and film "Barbarians at the Gate."
- The 1988 takeover of Safeway by Kohlberg Kravis Roberts (KKR) and other investors.
- The 1989 takeover of Beatrice Foods by Kohlberg Kravis Roberts (KKR) and other investors.
The greenmail raids of the 1980s were often controversial, as they were seen as a way for wealthy investors to profit from the misfortunes of other companies. The era of greenmail raids also led to changes in corporate governance and takeover laws, aimed at protecting companies and their shareholders from hostile takeovers.