Quick Answer
Schedule TO is the Tender Offer Statement that a bidder files at commencement of a tender offer. The third-party variant covers third-party offers; the issuer variant (TO-I) covers issuer self-tenders. Disclosure content is drawn from the items of Regulation M-A. Bidders must adequately publish the offer (long-form newspaper publication, summary advertisement plus mailing on request, or use of stockholder lists), amend for any material change in disseminated information, and file a final amendment reporting results.
Schedule TO is what the bidder gives the market at commencement. It announces the offer, identifies the bidder, sets out the price and terms, and lays out enough background information that shareholders can evaluate whether to tender. Every disclosure question on the bidder side traces back to Schedule TO.
What Schedule TO Is
Schedule TO is the Tender Offer Statement filed by the bidder at commencement of any third-party tender offer or issuer self-tender under the Securities Exchange Act of 1934.
Filing mechanics:
- Filed by the bidder at commencement of the tender offer
- Copies delivered to the subject company (target) and to the principal national securities exchange (or to FINRA for OTC-traded securities) where the subject security trades
- Disclosure content is drawn from the items of Regulation M-A (the integrated disclosure regime for tender offers and merger transactions)
Commencement is normally the date the offer is first published, sent, or given to security holders.
Schedule TO Variants
Four schedule variants cover the different offer structures.
| Form | Trigger | Filer |
|---|---|---|
| Schedule TO | Third-party tender offer for Exchange Act-registered equity (third-party rules) | Bidder |
| Schedule TO-I | Issuer tender offer under the issuer tender offer rule | Issuer |
| Schedule TO-T | Third-party tender offer (the "T" variant in practice) | Third-party bidder |
| Schedule 13E-3 | Going-private transaction under the going-private rule | Issuer or affiliate engaged in the going-private transaction (filed in addition to the underlying Schedule TO or Schedule 14A) |
Memory Aid: TO = third-party. TO-I = Issuer self-tender. 13E-3 = "going down" (delisting and deregistration).
Exam Tip: Gotchas
- Schedule TO-I is an ISSUER self-tender. Schedule 13E-3 is a going-PRIVATE transaction. An issuer self-tender that takes the company below 300 holders or delists it from an exchange is BOTH; the issuer files Schedule TO-I AND Schedule 13E-3.
Required Schedule TO Items
Schedule TO pulls its disclosure requirements from Regulation M-A. The core items every Schedule TO must cover:
- Identity and background of the bidder
- Terms of the transaction: price, type of consideration, expiration date, withdrawal rights, proration mechanics
- Source and amount of funds the bidder will use to pay for the tendered shares
- Purpose of the offer and plans for the target after the offer (continuation, merger, sale, restructuring, delisting)
- Past contacts, transactions, and negotiations between bidder and target
- Persons retained, employed, compensated, or used: financial advisors, dealer-managers, information agents
- Financial information about the bidder if material to a security holder's decision (more important when bidder is using debt or stock as consideration)
- For an issuer self-tender (Schedule TO-I), additional issuer-specific disclosures under Regulation M-A
Dissemination
The bidder must adequately publish the tender offer so shareholders can find out about it. Acceptable dissemination methods:
- Long-form publication in a newspaper
- Summary advertisement in a newspaper plus mailing of full materials on request
- Use of stockholder lists and security-position listings obtained from the target
Publication in all editions of a national-circulation daily newspaper is deemed adequate. The bidder must mail (first-class) the offer materials to any holder who requests them.
The dissemination requirement is what gives the 20-business-day minimum offering period meaning. Shareholders cannot evaluate an offer they cannot find.
Exam Tip: Gotchas
- Publication in all editions of a national-circulation daily newspaper is deemed adequate dissemination. The bidder does not need to mail every shareholder unsolicited; it must mail (first-class) to any holder who requests materials.
Amendments and Termination
The bidder's disclosure obligation does not end at commencement:
- Material-change amendment: The bidder must amend Schedule TO to report any material change in disseminated information (price change, condition change, new financing, change in plans for the target)
- Final amendment: The bidder must file a final amendment reporting the results of the tender offer (shares tendered, shares accepted, proration percentage if applicable)
A material change can also trigger an extension of the offering period under the extension-on-change rule (covered in the timing section).
Exam Tip: Gotchas
- Schedule TO is the BIDDER's disclosure. Schedule 14D-9 is the TARGET's response. The numbers run consecutively but the filers are different. This is one of the most common confusions on the exam.
- A material change to disseminated information requires an amendment to Schedule TO. Quiet amendments are not an option. The amendment may also trigger an extension of the offering period.