Sarthak, Greenmail is typically used by an acquirer in a hostile takeover scenario. In that case the acquirer will buy enough shares in the company to threaten the company of a takeover. Then the management will have to buy the shares back from the acquirer to prevent the takeover. And obviously the acquirer will sell the shares only at a mugh higher price since the company is at risk now of being acquired.
Dec 01 2012 11:04 AM
In the 1980's there were entire funds dedicated to just this kind of hostile takeovers......and threatening companies. Bonn Pickens is one of the most famous/infamous of such hostile takeover specialists.