Penta Timber plans on taking over Treerings Furniture.Penta acquires a block of stock in Treerings and then makes a tender offer to Treerings' shareholders.After a week,Penta decides to give up the tender offer if Treerings agrees to buy back the stock at a 5% premium over the fair market value.This payment is an example of a(n)________.

Question

Quizplus · Accepted Answer

This payment is an example of greenmail, where a company buys back its own shares at a premium to prevent a hostile takeover.

Penta Timber Plans on Taking Over Treerings Furniture