Entry in progress—B.P.
Whitemail, coined as an opposite to blackmail, has several meanings explained below.
In economics, whitemail is an anti-takeover arrangement in which the target company will sell significantly discounted stock to a friendly third party. In return, the target company helps thwart takeover attempts, by
1.raising the acquisition price of the raider,
2.diluting the hostile bidder’s number of shares, and
3.increasing the aggregate stock holdings of the company.
Whitemail can also be considered as legally compensating someone for doing their job in a manner benefiting the payer. For example, if a person gives a maître d’ a $20 bill in order to secure a table more quickly than other patrons who had arrived earlier, this could be considered whitemail. It is merely a compensatory incentive for someone to do their job quicker, better, or in a manner more advantageous to the payer. It can be considered a bribe, depending on the person being offered the incentive and the action the incentive is intended to influence.
What Does Whitemail Mean?
A strategy that a takeover target uses to try and thwart an undesired takeover attempt. The target firm issues a large amount of shares at below-market prices, which the acquiring company will then have to purchase if it wishes to complete the takeover.
A process where a company tries to prevent a hostile takeover by selling a majority of its stock to a third-party that is seeking to help the company, but not take it over. The company sells the shares to third-party at below-market prices. Whitemail may not halt the takeover attempt all together, but it does make the deal less attractive to the party initiating the takeover attempt.
7 September 1986, Miami (FL) Herald, “Judge’s straight beats Hunts’ three-of-a-kind,” pg. 1F:
Let’s coin a new word, whitemail. Definition: Whitemail is when a predator’s action triggers a rise in a company’s stock, and he’s able to take a quick profit.
High Steppers, Fallen Angels, and Lollipops:
Wall Street Slang
By Kathleen Odean
New York, NY: Dodd, Mead
(Another piece of financial slang with the same pattern is whitemail, which describes elaborately concealed large corporate bribes.)
22 December 1989, Boston (MA) Globe, “‘White knights’ are wave of future; Firms see them as key corporate defense” by Robert Lenzner, pg. 63:
“It’s whitemail,” said Robert Monks chairman of the investor rights organization Institutional Shareholder Services.
New York City • Banking/Finance/Insurance • (0) Comments • Sunday, February 13, 2011 • Permalink