Schedule TO

What Is Schedule TO?

Schedule TO is a regulatory filing with the Securities and Exchange Commission (SEC) required of a party that makes a tender offer under the Securities Exchange Act of 1934 that would bring about over 5% ownership of a class of the company's securities. The tender offer statement is administered by section 14(d)(1) or 13(e)(1) of the Securities Exchange Act.

Figuring out Schedule TO

A tender offer is a public offer to buy some or every one of the shares in a corporation from the existing shareholders made by either the company itself or by an interested outside party. These offers are typically made at a premium to the current price of the stock and have a predefined cutoff time. The shares of stock purchased in a tender offer become the property of the purchaser. From there on out, the purchaser, similar to some other shareholder, has the option to hold or sell the shares at their circumspection.

SEC rules require any corporation or individual gaining 5% of a company by means of a tender offer to unveil information to the SEC, the target company, and the exchanges where the securities are listed for trading. Extra regulations including tender offers are illuminated in the Sarbanes-Oxley Act of 2002.

On the off chance that the company tries to go private via a tender offer, it must incorporate SEC Form 13E-3 as part of the Schedule TO filing. This is a form that a publicly-exchanged company or an affiliate must file with the Securities and Exchange Commission when that company "goes private."

Requirements of Schedule TO

There are 13 things the filer must address on the tender offer statement:

1. Summary Term Sheet
2. Subject Company Information
3. Identity and Background of Filing Person
4. Terms of the Transaction
5. Past Contacts, Transactions, Negotiations, and Agreements
6. Motivations behind the Transaction and Plans or Proposals
7. Source and Amount of Funds or Other Consideration
8. Interest in Securities of the Subject Company
9. People/Assets, Retained, Employed, Compensated, or Used
10. Financial Statements
11. Extra Information
12. Exhibits
13. Information Required by Schedule 13E-3

Special Considerations

The SEC manages tender offers. Most tender offers require bidders to file certain records that reveal key insights concerning the bidders and the terms of the offer. Large numbers of the regulations are intended to give protection to the security holders.

For instance, security holders are given withdrawal rights, which is their right to pull out their tender of securities inside a certain time span. The bidder must make the tender open to all security holders of the class of securities subject to the offer. Moreover, the bidder must give every security holder the best price. They can't offer a few holders one price and others an alternate price.

All tender offers are subject to provisions that shield the public and security holders from fraud. This incorporates mini-tender offers, which are tender offers intended to bring about an ownership position of five percent or less of the outstanding shares.

Schedule TO Example

On May 1, 2018, the biotech company AbbVie Inc. initiated a tender offer to purchase its shares for cash, including up to $7.5 billion of its common stock at a price for every share somewhere in the range of $99 and $114. On that date, the company filed Schedule TO with the components listed previously. AbbVie structured the tender offer as a dutch auction, by which the least price inside the reach that permitted the company to purchase up to $7.5 billion would be the last tender price. The tender offer period was set at around one month. Schedule TO contained every one of the vital revelations for shareholders to choose whether to sell shares back to AbbVie.

On June 4, 2018, AbbVie announced the aftereffects of its tender offer. The company purchased roughly 72.8 million shares of its common stock at $103 per share. This addressed around 4.6% of the shares outstanding.

Features

• Security holders are protected by other enemy of fraud provisions connected with the bidder's duty to furnish every security holder with the best price and to make the tender open to all qualified security holders.
• Schedule TO safeguards security holders by requiring the issuer of the tender bid to uncover key information with respect to the terms of the offer and the identity of the bidders.
• A tender offer is a public solicitation to all shareholders mentioning that they make accessible their stock available to be purchased at a specific price during a certain time back to the issuer or an outside interested party.
• Schedule TO is a SEC form that must be presented by a party making a tender offer that would bring about in excess of a 5% ownership of a class of a company's securities.
• Schedule TO records 13 required things to be filled out by the issuer before the tender offer can be approved by regulators.