The threat of greenmail
by minority creditors to hold up a restructuring using a scheme can lead to significant value leakage from the restructuring where the scheme proponents need to effectively pay off minority class creditors in order to secure their approval.
The Livedoor court enumerated four examples of abusive motives: (1) greenmail
, (2) 'scorched earth' practices involving stripping the target of intellectual property or key customer relationships after the acquisition, (3) liquidation of the target's assets to pay down debt of the acquirer, and (4) selling off assets unrelated to the core business of the target in order to pay a [large] dividend.
, White Knights, and Shareholders' Interests, 17 RAND J.
Common defenses include shareholders' rights plans, voting rights plans, staggered boards, greenmail
, the use of white knights, and the pac-man response.
Chancery's current view of greenmail
is that it is generally
(20) To rid the company of its unwanted suitor, on March 9, 1983, Norlin paid $12.3 million in greenmail
to repurchase the 474,700 shares owned by Lawrie at $26 per share, a substantial premium above the $14 to $17 per share that Lawrie had paid for its original investment.
(168) The corporate takeover world, in contrast, has seen many effective statutory schemes developed to provide some level of protection against midnight raid tender offers or greenmail
(8) Among the tactics used by boards of directors to defeat hostile takeover attempts were: "shark repellants", "greenmail
", "white knights", and "Pac-Man".
Mass media is making a lot of mentions about shareholder fights, hostile takeovers, litigations associated with decisions made at shareholder meetings, greenmail
of issuers by minority shareholders, etc.
Nevertheless, the firing was unprecedented and, Greenhouse believes, set the groundwork for future labor "concessions." Well-financed corporate raiders also played a negative role, in his opinion, by either taking over struggling companies and selling off their assets (and putting their employees out of work) or by walking away with "greenmail
." He feels the loss of jobs and job security as a result of corporate downsizing has also hurt the labor movement.
Many professional investors suspected that Haft's real goal was to "greenmail
" Safeway by forcing the company to repurchase its own common stock at a premium.