Greenmail

Greenmail is a tactic used in corporate takeovers where an investor buys a substantial amount of a company's shares, then threatens to launch a takeover or disrupt operations. To prevent this, the company's management may negotiate and buy back the shares at a premium, effectively paying the investor for stopping their hostile plans. This process benefits the investor, who gains a profit without needing to complete a takeover, while the company pays a premium, often at the expense of shareholders. Greenmail can create ethical concerns and potential conflicts of interest in corporate governance.