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 result in more than 5% ownership of a class of the company's securities. The tender offer statement is governed by section 14(d)(1) or 13(e)(1) of the Exchange Act.

Key Takeaways

  • Schedule TO is an SEC form that must be submitted by an issuer of securities seeking to make a tender offer.
  • A tender offer is a public solicitation to all shareholders requesting that they make available their stock for sale at a specific price during a certain time back to the issuer.
  • Schedule TO lists thirteen required items to be filled out by the issuer before the tender offer can be approved by regulators.

Understanding Schedule TO

A tender offer is a public offer to buy some or all 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 normally made at a premium to the current price of the stock and have a specified deadline. The shares of stock purchased in a tender offer become the property of the purchaser. From that point forward, the purchaser, like any other shareholder, has the right to hold or sell the shares at his discretion.

SEC rules require any corporation or individual acquiring 5% of a company via a tender offer to disclose information to the SEC, the target company, and the exchanges where the securities are listed for trading. Additional regulations involving tender offers are spelled out in the Sarbanes-Oxley Act of 2002.

If the company seeks to go private by way of a tender offer, it must include SEC Form 13E-3 as part of the Schedule TO filing, which is a form that a publicly traded company or an affiliate must file with the Securities and Exchange Commission when that company "goes private." 

What Is on a Schedule TO?

There are 13 items that must be addressed by the filer on the tender offer statement. They are: 

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

Schedule TO Example

On May 1, 2018, the biotech company AbbVie Inc. commenced a tender offer to purchase its shares for cash up, involving up to $7.5 billion of its common stock at a price per share between $99 and $114. On that date, the company filed Schedule TO with the elements listed above. AbbVie structured the tender offer as a dutch auction, whereby the lowest price within the range that allowed the company to purchase up to $7.5 billion would be the final tender price. The tender offer period was set at approximately one month. Schedule TO contained all the necessary disclosures for shareholders to make a decision whether to sell shares back to AbbVie.