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Greenmail - how does it make sense?
Hi all - good to be back!
I was reading up on takeover defenses, and greenmail is just something I don't really get.
Definition: Greenmail is a post-offer defence whereby the target company buys back the shares from the acquirer with company cash, usually at a premium. It then goes on to say that in essence the target pays the acquirer to go away
Er, what the frak? How does that kind of defence even work? Paying someone to go away sounds fundamentally flawed. Can anyone add to this?
This is CFA!!!