Word: greenmail
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Dates: during 1980-1989
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Blackmail by Greenmail...
Walt Disney Productions and St. Regis Corp., the forest-products firm, have both been victims of greenmail. In a greenmail ploy, an investor buys enough stock in a company to pose a takeover threat in hopes that the firm's officers will buy him out at a premium. Disney paid $297.4 million in June for shares held by Financier Saul Steinberg, who made a quick $32 million profit. St. Regis has been greenmailed twice, first by Sir James Goldsmith, the British industrialist, and then by Loews Corp., the hotel and movie-theater company...
Last week Disney and St. Regis faced the fact that greenmail is like blackmail: a company that pays once merely invites new demands. Australian Publisher Rupert Murdoch, who owns 5.6% of St. Regis, said that he was raising $757 million to buy 50.1%. Meanwhile, a group of investors headed by Financier Irwin Jacobs revealed that it had bought 5.8% of Disney and wanted more. St. Regis and Disney took no immediate action in response to the moves by Murdoch and Jacobs. The companies will surely think twice before paying more greenmail...
...tactics used by Disney and other greenmail targets came under very strong criticism last week. Said Jay Marshall of Merrill Lynch: "Clearly, in many cases, the executives are just messing up the company. Management's feeling is: cripple us, poke out our eyes and maybe they won't like us any more." That kind of scorched-earth policy may save the jobs of top management, but it does not help investors, who see the greenmailer make a huge profit while their shares decline in value. Said T Boone Pickens, a frequent opponent of entrenched corporate offi cials...
...greenmailing of Walt Disney was successful, but it may change the whole greenmail game. The New York Stock Exchange and the Los Angeles office of the Securities and Exchange Commission are looking into possible insider trading of Disney stock. The SEC had already pro posed legislation that would require stockholder approval of stock buy-back plans, and the Disney debacle is sure to win it support. Moreover, Democratic Congressman Timothy Wirth of Colorado has conducted hearings that may lead to a legislative crackdown on questionable takeover tactics...