Whitemail

Whitemail is a strategy that a takeover target can use to try to thwart a hostile takeover attempt. Whitemail involves the target firm issuing a large amount of shares at below-market prices, which are then sold to a friendly third party. This helps the target avoid the takeover by increasing the number of shares the acquirer must purchase in order to gain control, thus increasing the price of the takeover. It also dilutes the shares. Plus, since a friendly third party now owns and controls a large block of shares, the aggregate number of friendly shareholders increases.