Schedule 13E-4

Schedule 13E-4 is known as an issuer tender offer statement. It must be filed by certain reporting companies that make tender offers for their own securities – known as a self-tender offer. Schedule 13E-4 is filed in connection with Rule 13e-4 under the 1934 Act imposing added requirements that an issuer must comply with when it is making an issuer tender offer.

Schedule 13E-4 is now considered to be obsolete by the SEC. It was replaced in January 2000 by Schedule TO-I.

An issuer tender offer allows a company to buy back its own stock from shareholders, often at a price above market value. Usually, this is done in an attempt to stop or avoid a hostile takeover, because if a firm becomes its own majority shareholder, it can make a hostile takeover either impossible, or prohibitively expense for the company that wants to take it over. Issuer tender offers are, therefore, an antitakeover measure.

Schedule TO-I includes a total valuation of the proposed transaction, for the purpose of calculating the filing fee, which is calculated pursuant to Rule 0-11 of the Securities and Exchange Act of 1934. The schedule also includes an introductory statement which lays out the terms of the issuer tender offer, including the time and date of expiry of the put option; which securities the company 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.

Recent self-tender offers include one made by Herbalife in April 2018, in which the company announced that it would buy back up to $600 million worth of its common shares. The company offered $98 to $108 a share; its shares were valued at $103.02 at closing on the day before the announcement. The announcement caused the company’s share price to increase.

Another recent self-tender offer came from AbbVie in May 2018, when the company 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.