Ferocious battles for corporate control continue to dominate the attention of the corporate world. When institutions as large as Gulf Oil and as prominent as Walt Disney Enterprises become the targets of takeovers, even the popular press takes notice. The ingenuity of investment bankers and lawyers has grown apace, and the tactics of both raiders and targets have become more complex. The two-tiered tender offer and greenmail, two tactics used by raiders in these battles, have sparked considerable comment.

 

This Article first examines the current regulatory environment for two-tiered tender offers and greenmail under federal and state law. Under federal law, so long as there is full disclosure, the practices are essentially unregulated. The Article next examines the economic arguments concerning the two practices, starting from the premise that encouraging an active market for corporate control is sound public policy.