• Greenmail is a practice in which a greenmailer buys up a significant stake in a company and threatens a hostile takeover.
  • The target company can counter the takeover attempt by buying back its shares at a premium from the greenmailer.
  • Greenmail became more frequent and controversial in the 1980s.
  • Anti-greenmail regulations, laws, ordinances, and taxes made greenmail more difficult after the 1980s.
  • Critics see greenmail as a predatory practice similar to extortion, but it can be defended as a market-based solution to shareholder disputes.