Schedule 13E-4

What Is Schedule 13E-4?

The term Schedule 13E-4 refers to a form that public companies were required to file with the Securities and Exchange Commission (SEC) when they made tender offers for their own securities. The form, known as an issuer tender offer statement, was required under the Securities Exchange Act of 1934. It imposed added requirements that an issuer was required to comply with when it made a self-tender offer. The form was replaced by Schedule TO-I in 2000.

Understanding Schedule 13E-4

A tender offer takes place during public takeover bids of public companies. The potential acquirer makes the tender offer publicly in writing, stating its intention to purchase some or all the stock of the target company's shareholders. The bidder normally makes an offer at a premium from what the stock would go for on the open market. Tender offers may signal a hostile or friendly takeover.

In some cases, companies may want to buy back their own stock from their shareholders. These offers are known as self-tender offers. Just like a regular tender offer, the offer price is normally well above the market price per share. Self-tender offers are commonly made when a company is trying to fight off a hostile takeover attempt. By becoming its own majority shareholder, a target company can make a hostile takeover either impossible or prohibitively expensive for the company behind it.

Public companies making tender or self-tender offers are required to report their intentions by filing forms with the SEC. Schedule 13E-4 was the form required for a self-tender offer as per Rule 13E-4 of the Securities Exchange Act of 1934. The purpose of the rule is to prevent any deception and/or fraud. Until January 2000, companies needed to submit the form as soon as the offer was made. Information on the form included, but wasn't limited to:

Example of Self-Tender Offer

Herbalife filed Schedule TO-I in April 2018, in which the company announced it would buy back up to $600 million worth of its common shares. The company offered $98 to $108 a share. Its shares, though, were valued at $103.02 at closing on the day before the announcement. The announcement caused the company’s share price to increase.

Here's another example of a self-tender offer. In May 2018, AbbVie announced that it would repurchase up to $7.5 billion of its common stock at prices ranging from $99 to $114 a share. Stockholders were allowed to tender their stock at a price of their choosing within that range, but when the tender offer expired, AbbVie would choose the best price within the range of those offered by stockholders at which to repurchase up to $7.5 billion of its common stock.

Schedules 13E-4 and TO-I can be viewed on the SEC's Electronic Data Gathering, Analysis, and Retrieval system.

Special Considerations

Schedule 13E-4 is now considered to be obsolete by the SEC. It was replaced in January 2000 by Schedule TO-I. This new form requires similar information that was found on Schedule 13E-4 as well as an introductory statement laying out the terms of the issuer tender offer, the securities that the filer is offering to purchase, and whether the company believes its financial condition plays a role in the decision to issue a self-tender offer. The company must specify why it believes that its financial condition does or doesn’t play a role in its decision to issue a self-tender offer.