What is Schedule TO-T?

Schedule TO-T is a form that must be filed with the SEC (Securities Exchange Commission) by any organization or entity that makes a tender offer for another company’s equity securities. The TO is Schedule TO stands for “tender offer” and the final “T” stands for “Third-party”. A Schedule TO-T must be filed when an entity attempts to take over another entity through a tender offer for the other company’s shares.

A Schedule TO-T is not only a requirement for complete or major takeover-based tender offers. Every time an entity aims to acquire more than 5% of another firm's shares, it must file a Schedule TO-T with the Securities and Exchange Commission. The Schedule TO-T must also be sent to the company of which the shares are being acquired and also to any other entities that have placed competing bids for the target firm’s shares.

A tender order being made when considering the acquisition of a firm may be for a particular part (some shareholders) or the firm’s shares in its entirety (from all the shareholders). When making this offer, the offering company often does by publicly inviting shareholders to sell their shares and even offering a premium as compared to the market rates for the shares. By purchasing stocks from a majority of shareholders, the acquiring company can take over and control the target firm whether they want the acquisition to take place or not.

History of Schedule TO-T

The entire concept of Schedule TO-T spawned to provide the market with more accuracy and transparency and to also mitigate financial fraud. A completed Schedule TO-T must also be sent to certain parties along with the SEC such as the issuer of the security and any other entities that have placed competing bids for the target.

Making a tender offer refers to publicly making known the effort towards acquiring a publicly-traded company. It is vital to report a tender offer when it’s made as per Section 14d or 13e of the Securities Exchange Act of 1934, which was established to oversee the exchange of securities on the secondary market.

Information on Schedule TO-T

If a third party intends to purchase more than 5% of a target company’s stock to acquire and control the company, they must disclose their intentions to the SEC. The Information on Schedule TO-T includes:

  1. The entity making the tender offer
  2. The subject company
  3. The CUSIP number of the securities
  4. The number of shares
  5. The price per share as per the tender offer
  6. The transaction valuation

The Schedule TO-T also includes the total amount of the filing fee as well as any amendments to a TO statement initially filed with the SEC.

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