A tender offer is a public solicitation of a company’s shareholders to buy the company’s stock at a specified price per share during a specified time period. The solicitation can be made either by the company itself or a third party. The price offered is usually at a significant premium to the current market price of the company’s stock.

For public companies, the key disclosure document that must be filed with the Securities and Exchange Commission (SEC) in order to commence a tender offer is called a Schedule TO. The Schedule TO filing is required for making a tender offer for securities registered under the Securities Exchange Act of 1934.

There are a couple of different types of Schedule TO filings depending on the type of tender offer or the nature of the disclosure. For an issuer tender offer, a Schedule TO-I will be filed by the issuer to commence the tender offer. For a third-party tender offer, a Schedule TO-T will be filed by the third-party initiating the tender offer. A third-party tender offer may be initiated in connection with a hostile acquisition or if a particular shareholder is seeking to gain a controlling stake in the target company to influence decisions. There is also a type of filing called a Schedule TO-C for preliminary communications made before the commencement of a planned tender offer. For example, a Schedule TO-C may be filed to disclose company FAQs or a press release relating to the planned tender offer.

In accordance with SEC rules, a tender offer must remain open for a minimum of 20 business days. If there are material changes to the terms of the tender offer, such as increasing the price per share, the tender offer must be extended for a minimum of 10 additional business days. Before the expiration date, the tender offer can be extended by the offeror. If the tender offer deadline is extended, a press release should be issued to announce the new tender offer deadline.

The offeror may offer cash, shares, or a combination of cash and shares as consideration for buying shares from the target company’s shareholders. The disclosure in the Schedule TO will differ depending on whether it is an all-cash tender offer or a stock tender offer, also called an exchange offer.

The Schedule TO lists a number of required disclosure items including:

• Summary term sheet
• Subject company information
• Terms of the transaction
• Purposes of the transaction
• Source and amount of funds or other consideration
• Financial statements

There are a number of exhibits that may be required to be attached to the Schedule TO depending on the specific circumstances. One key disclosure document attached as an exhibit is called the Offer to Purchase. This document outlines the official terms of the tender offer. A Letter of Transmittal form may also be attached to the Schedule TO. The Letter of Transmittal can be used by the target company’s shareholders who want to tender their shares. The company’s press release announcing the commencement of the tender offer is also typically attached as an exhibit.