Bbankmail is a tactic used in company mergers or acquisitions, specially in the case of a hostile takeover. It is an agreement between a company and a bank whereby the bank commits to providing financing for a specific takeover bid while agreeing not to finance competing bids from other potential acquirers.

History

Bankmail became popular in the 1980s during the hostile takeover boom. Unlike takeover defenses such as poison pills or greenmail, bankmail operated through acquisition financing: a bank that supported one party to a transaction agreed not to finance a competing bidder.

Notable cases

One of the most well-known examples is the 1989 attempted merger of Time Inc. and Warner Communications. Time allegedly paid a few banks not to help finance a hostile bid while also arranging emergency financing for itself.

In another attempted takeover of Unocal Corp.. by T. Boone Pickens' Mesa Petroleum, Unocal sued Security Pacific National Bank.

See also

• Mergers and acquisitions

• Takeover

• Greenmail

• White knight (business)

• Breakup fee

References