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Schedule TO

Also known as: Schedule TO-T, Schedule TO-I, tender offer statement

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Schedule TO is the tender offer statement filed with the SEC by anyone making a tender offer for a class of a public company's equity securities. It is filed as a Schedule TO-T when a third party bids for another company's shares, and as a Schedule TO-I when a company offers to buy back its own shares.

How it works

The Schedule TO is filed on the date the offer begins. The offer to purchase, attached as an exhibit, sets out the price, the number of shares sought, conditions (such as a minimum tender threshold or regulatory approval), financing, withdrawal rights, and the expiration date. Amendments are filed as terms change, and a final amendment reports results.

Federal rules require a tender offer to remain open for at least 20 business days, and for at least 10 business days after any change in price or the percentage sought. The target company must file a Schedule 14D-9 within 10 business days of the start of a third-party offer, stating whether it recommends that shareholders accept, reject, or remain neutral. Pre-commencement communications are filed under the same form type with a box checked.

Why it matters for traders

Tender offers move faster than mergers that require a shareholder vote, so a friendly two-step deal (tender offer followed by a merger) can close in roughly a month or two. For merger arbitrage, the expiration date and the minimum condition are key. In a hostile takeover, the Schedule TO-T and the target's 14D-9 response frame the fight. Issuer tender offers, including Dutch auctions, are a form of share buyback and can signal management's view that the stock is undervalued.

Example

A hypothetical pharma company launches a tender offer for all shares of Northwind Therapeutics (NWTX) at $25 cash, a 40% premium to the prior close of about $17.86. The buyer files a Schedule TO-T on day one, with the offer set to expire after 20 business days and conditioned on a majority of shares being tendered. NWTX files a Schedule 14D-9 recommending acceptance, and the stock trades at $24.70, a spread of about 1.2%.

FAQ

What is the difference between Schedule TO-T and TO-I?

TO-T is filed by a third-party bidder; TO-I is filed by a company tendering for its own securities.

How long must a tender offer stay open?

At least 20 business days, and at least 10 business days after certain changes in terms.

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Related terms

Tender offerA public offer to buy shares directly from a company's stockholders at a fixed price or price range, usually at a premium and for a limited time.Hostile takeoverAn attempt to acquire a company against the wishes of its board, typically through a tender offer directly to shareholders or a proxy fight.Merger agreementThe binding contract between an acquirer and a target that sets the deal price, structure, closing conditions and termination rights of an acquisition.Share buybackA company's repurchase of its own shares from the market or directly from holders, reducing shares outstanding and returning cash to investors.Merger arbitrageA strategy that buys the stock of an acquisition target after a deal is announced to capture the gap between its market price and the offer price.Schedule 13DThe SEC disclosure an investor must file after acquiring more than 5% of a company's voting stock with an active intent, such as seeking change.

Part of the Quantisnow financial glossary. For longer explainers, see the investing guides. Educational content, not investment advice.