A tender offer is a broad solicitation by a company or a third party to purchase a substantial percentage of a company’s Section 12 registered equity shares or units for a limited period of time. The offer is at a fixed price, usually at a premium over the current market price, and is customarily contingent on shareholders tendering a fixed number of their shares or units. Under the Securities Exchange Act of 1934, parties who will own more than five percent of a class of the company’s securities after making a tender offer for securities registered under the Exchange Act must file a Schedule TO with the SEC. The SEC also requires any person acquiring more than five percent of a voting class of a company’s Section 12 registered equity securities directly or by tender offer to file a Schedule 13D.
The filings required by Section 14(d) of the Exchange Act and Regulation 14D provide information to the public about persons other than the company who make a tender offer. The company that is the subject of the takeover must file with the SEC its response to the tender offer on Schedule 14D-9. The rules also set time limits for the tender offer and provide other protections to shareholders. When a public company makes a tender offer for a class of its own equity securities, it similarly must file a Schedule TO and may also need to file a Schedule 13E-3.
Except for the anti-fraud and a few other provisions of Regulation 14E, the SEC’s tender offer rules generally do not apply to tender offers that result in ownership of five percent or less of the outstanding shares —also known as “mini-tender offers.”