Corporate Finance - Greenmail

When a hostile bidder purchases shares in a target and threatens to take control, and the target pays the hostile a premium for those shares to make the hostile bidder go away, this is known as greenmail. Greenmail occurred quite frequently in the mid-1980's, with Carl Icahn, T. Boone Pickens, and Saul Steinberg making millions from greenmail. Greenmail is less common today because (a) some companies have anti-greenmail provisions which prevent the board from paying greenmail and (b) the U.S. now taxes profits from greenmailing at 50%, which reduces the incentive to greenmail a company. You can read about Saul Steinberg's greenmailing of Quaker State here: https://www.nytimes.com/1984/03/31/business/quaker-state-buys-back-shares-from-reliance.html You can read about Saul Steinberg's greenmailing of Disney here: https://www.washingtonpost.com/archive/business/1984/06/17/greenmail-takeover-tactic-under-scrutiny/bf9cdef6-580f-4c46-8770-9fb5daca4ea6/— Edspira is the creation of Michael McLaughlin, an award-winning professor who went from teenage homelessness to a PhD. Edspira’s mission is to make a high-quality business education freely available to the world. — SUBSCRIBE FOR A FREE 53-PAGE GUIDE TO THE FINANCIAL STATEMENTS, PLUS: • A 23-PAGE GUIDE TO MANAGERIAL ACCOUNTING • A 44-PAGE GUIDE TO U.S. TAXATION • A 75-PAGE GUIDE TO FINANCIAL STATEMENT ANALYSIS • MANY MORE FREE PDF GUIDES AND SPREADSHEETS * http://eepurl.com/dIaa5z — SUPPORT EDSPIRA ON PATREON *https://www.patreon.com/prof_mclaughlin — GET CERTIFIED IN FINANCIAL STATEMENT ANALYSIS, IFRS 16, AND ASSET-LIABILITY MANAGEMENT * https://edspira.thinkific.com — LISTEN TO THE SCHEME PODCAST * Apple Podcasts: https://podcasts.apple.com/us/podcast/scheme/id1522352725 * Spotify: https://open.spotify.com/show/4WaNTqVFxISHlgcSWNT1kc * Website: https://www.edspira.com/podcast-2/ — GET TAX TIPS ON TIKTOK * https://www.tiktok.com/@prof_mclaughlin — ACCESS INDEX OF VIDEOS * https://www.edspira.com/index — CONNECT WITH EDSPIRA * Facebook: https://www.facebook.com/Edspira * Instagram: https://www.instagram.com/edspiradotcom * LinkedIn: https://www.linkedin.com/company/edspira — CONNECT WITH MICHAEL * Twitter: https://www.twitter.com/Prof_McLaughlin * LinkedIn: https://www.linkedin.com/in/prof-michael-mclaughlin — ABOUT EDSPIRA AND ITS CREATOR * https://www.edspira.com/about/ * https://michaelmclaughlin.com