Which of the following is the best definition of greenmail?
A) The complete absorption of one company by another, where the acquiring firm retains its identity and the acquired firm ceases to exist as a separate entity.
B) Going-private transactions in which a large percentage of the money used to buy the stock is borrowed. Often, incumbent management is involved.
C) Typically an agreement between firms to create a separate, co-owned entity established to pursue a joint goal.
D) A targeted stock repurchase where payments are made to potential bidders to eliminate unfriendly takeover at-tempts.
E) All publicly owned stock in a firm is replaced with complete equity ownership by a private group.

Question

Quizplus · Accepted Answer

Greenmail refers to a situation where a company buys back its own shares from a potential acquirer at a premium to avoid an unwanted takeover attempt. This is essentially a targeted stock repurchase aimed at eliminating threats from unfriendly bidders.

Which of the Following Is the Best Definition of Greenmail