tell me more about green shoe option

i have got thriugh this term most frequently. but i want a thorough knowledge of it.

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Some examples of Greenshoe Options are:

1. The Esso unit of Exxon Mobil Corporation (NYSE:XOM) sold an additional 84.58 million shares during its initial public offering, because investors placed orders to buy 475.5 million shares when Esso had initially offered only 161.9 million shares. The company took this step because the demand surpassed their share supply by two-times the initial amount.

2. Another example is the Tata Steel Company, which was able to raise $150 million by selling additional securities through the greenshoe option.

For a detailed understanding of it refer to the book "The Murky Waters Of The IPO Market".


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