Q: What is the difference between SC TO-I and SC TO-T?
A: SC TO-I is filed when the company itself, or its affiliate, is tendering for its own shares. SC TO-T is filed when a third party is making the offer.
Schedule TO (Tender Offer Statement)
Tender offer statement
Definition
Schedule TO is the disclosure document filed with the SEC by anyone making a tender offer for a public company's equity securities, a public offer to buy shares directly from holders, usually at a fixed price and within a set window. It is filed under Section 14(d)(1) of the Securities Exchange Act of 1934 for an offer by an outside party, and under Section 13(e)(1) for an offer by the company itself or its affiliate to repurchase its own shares.
On EDGAR the two variants appear separately, as SC TO-T for a third-party offer and SC TO-I for an issuer offer.
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Details
The schedule, set out in Rule 14d-100, draws its content from Regulation M-A. Its items cover a summary term sheet in plain language, the subject company, the identity of the bidder, the terms of the offer, past contacts and negotiations between the parties, the purpose of the offer and any plans for the company afterward, the source and amount of funds, the bidder's existing stake, anyone paid to solicit tenders, and, where material, the bidder's financial statements.
For an issuer tender offer, Rule 13e-4 requires the company to file all written communications about the offer beginning with the first public announcement, the Schedule TO and exhibits, prompt amendments for material changes, and a final amendment reporting results. The offer must stay open at least 20 business days from commencement and at least 10 business days after any change in the price or the percentage of shares sought. Holders may withdraw tendered shares at any time while the issuer's offer remains open.
For investors, an SC TO-I usually signals a buyback executed as a tender offer, and the final amendment shows how many shares were actually purchased. An SC TO-T often signals an acquisition attempt, and the purpose and plans items describe what the bidder intends to do with the company.
FAQ
Q: How long must a tender offer stay open?
A: For an issuer tender offer, Rule 13e-4 requires at least 20 business days from commencement, and at least 10 business days after any increase or decrease in the price or the percentage of the class being sought.
Q: How do I find out how many shares were tendered?
A: Look for the final amendment to the Schedule TO, which reports the results of the offer once it closes.
Q: What is the tender offer rule?
A: Regulation 14E governs every tender offer for equity securities. Rule 14e-1 requires the offer to stay open at least 20 business days, and at least 10 business days after a change in the price or the percentage of shares sought, and requires prompt payment when it closes. The all-holders and best-price rules require the offer to be open to every holder of the class and every tendering holder to receive the highest price paid.
Q: What happens if I don't tender my shares?
A: You keep them. In an issuer buyback, the company buys back other holders' shares, so your percentage ownership rises. In a third-party acquisition, a bidder that gains control often follows with a second-step merger that cashes out the remaining holders. Delaware Section 251(h) lets it complete that merger without a stockholder vote, but only for the same consideration paid in the tender offer.
Q: How do I know whether to accept a tender offer?
A: Compare the offer price with the current market price and read the target company's response. Rule 14e-2 requires the target to tell shareholders, within 10 business days of the offer starting, whether it recommends accepting, rejecting, or remaining neutral, and why. For a third-party offer that statement is filed on Schedule 14D-9.
Related Terms
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