Greenmail
Definition
Greenmail is the practice of buying a large stake in a company, threatening a takeover, and then selling the stake back to the company at a premium in exchange for going away. The target buys peace; the raider books a profit without ever completing a deal.
In practice
Greenmail flourished in the early 1980s and became a symbol of the era’s excess. Tax penalties and shareholder anger have largely killed the classic form, but the underlying logic, being paid to go away, still shapes activist settlements.