What Is Schedule TO-T?

Schedule TO-T is a form that must be filed with the Securities Exchange

Commission (SEC) by any entity that makes a tender offer for another
company's equity securities, as registered under the Securities Exchange
Act of 1934. The "TO" in schedule TO stands for "tender offer," and the "T"
for "third party."

KEY TAKEAWAYS

 Schedule TO-T must be filed whenever an entity makes a tender

offer for another company's shares, as part of a takeover bid.
 The form must be filed with the Securities and Exchange Commission
any time an entity plans to acquire more than 5% of another firm's
shares.
 Schedule T0-T must also be sent to the company whose stock is
being acquired and any other entities that have placed competing
bids for the target firm's shares.
 The rules pertaining to Schedule TO-T are pursuant to Section 14d or
13e of the Securities Exchange Act of 1934.
Understanding Schedule TO-T
Tender offers occur as part of public takeover bids. An investor or company
may make a tender offer to purchase shares of another company from
some or all of its shareholders when they want to acquire it. The entity
making the offer normally does so publicly, offering to pay a premium to the
market price for the stock. By purchasing a majority of another company’s
shares directly from its stockholders, the acquiring company may be able to
take control of the target firm, whether or not that company wants to be
acquired.

Third parties that make tender offers must disclose their intentions to the
SEC if they intend to acquire more than 5% of the target's shares. This is
done by filing Schedule TO-T. Share issuers, on the other hand, are
exempt from filing the form.

Information on Schedule TO-T includes:

 The entity making the tender offer

 The subject company
 The CUSIP number of the securities
 The number of shares
  The price per share as per the tender offer
 The transaction valuation

Schedule TO-T also includes the total amount of the filing fee. The fee
calculation method is outlined in the form. The schedule may also include
any amendments to a TO statement initially filed with the SEC.

Other SEC Forms Required in a Tender Offer

Schedule TO-T is a subset of the Schedule TO filing—also referred to as a
tender offer statement. Other schedules include TO-I, which contains issuer
information, and TO-C, which must be filed when written communications
are produced and distributed relating to the tender offer. 

History of Schedule To-T

The concept of reporting a tender offer—of publicly making known an effort
to acquire a publicly-traded company—is pursuant to Section 14d or 13e of
the Securities Exchange Act of 1934, which was established to oversee the
exchange of securities on the secondary market. The act aims to provide
the market with more accuracy and transparency while mitigating
financial fraud.

 
The Schedule TO-T form replaced Schedule 14D-1 in January 2000.

As per Regulation 14d, a completed Schedule TO-T, third-party tender offer

statement, or third-party tender offer must also be sent to certain parties in
addition to the SEC. These include the issuer of the security and any other
entities that have placed competing bids for the target. The regulation also
sets forth other requirements that must be complied with in connection with
a tender offer.1

Special Considerations
A third-party tender offer is usually performed as the first part of a two-
step merger, also known as a two-tier bid, because it is unlikely that all of a
company’s shareholders want to sell their stock pursuant to the would-be
acquirer.

Securities owned by a shareholder who accepts an acquirer's tender offer

are called assented stock or assented shares. Securities owned by
stockholders who refuse are called non-assented stock.
If the bidder or acquiring company owns 90% of the stock in the company
to be acquired, they can perform a short-form merger. This type of deal
doesn’t require stockholder approval from the target company. It is unlikely,
though, that a company is ever able to acquire 90% of another company’s
stock through a tender offer. That's why mergers like these usually take
place between a parent company and its subsidiary.

It is much more common, however, for a buyer to perform a back-end

merger. This occurs when the buyer acquires a majority of stock during a
tender offer, then acquires the company as a whole by using its influence
as a majority shareholder to consent to the merger. The most common
form of back-end merger is a reverse triangular merger, in which the target
company continues as a subsidiary of the buyer. This kind of merger
requires less paperwork in the form of third-party consents.