USA Law and Practice Contributed by: Vijay Sekhon, Brien Wassner, John Godfrey and Justin Macke, Sidley Austin LLP
7.2 Material Shareholding Thresholds and Disclosure in Tender Offers In the US, material shareholding disclosures are pri - marily governed by Section 13 and Section 14 of the Securities Exchange Act of 1934, and they play a criti - cal role for private equity-backed bidders preparing to launch a tender offer or accumulate a significant stake in a public company. Schedule 13D – Active Investors A PE-backed bidder acquiring more than 5% of a class of voting equity securities of a US public com - pany must file a Schedule 13D within ten calendar days of crossing the threshold if the intent is active – ie, to influence control, propose a transaction or engage with management. The filing must disclose the identity of the acquirer, source of funds, purpose of the acquisition, and any plans or proposals relating to the company (eg, merg - ers, restructurings). All direct and indirect beneficial owners must be disclosed, including fund structures, co-investors and control persons. Recent rule chang - es shorten the filing deadline to five business days post-acquisition and require amendments within two business days of material changes – important for fast-moving tender offers or stake-building strategies. Many private equity firms acquire just under 5% of a public company target prior to making an acquisi - tion proposal to such target, with a view to making a significant profit on the acquired shares while keeping such shareholding private and confidential. Schedule 13G – Passive Investors If the private equity bidder acquires more than 5% but is purely passive (ie, no intention to influence control), a Schedule 13G may be used instead – though this is rarely applicable in a tender offer context. The pas - sive investor must file within 45 days after year-end, or earlier if crossing 10% (triggering a five-day filing window). Schedule TO – Tender Offers A private equity bidder launching a tender offer must file a Schedule TO (Tender Offer Statement) no later than the date the tender offer is first published, sent
or given to security holders. The Schedule TO must include: • detailed terms of the offer (price, conditions, tim - ing); • source and amount of funds (including debt and equity financing); • intentions regarding control and governance; and • any material agreements or arrangements with respect to the target’s securities. If the bidder already owns over 5% of the target, a Schedule 13D amendment must also be filed con - currently with the Schedule TO, aligning disclosure across forms. 7.3 Mandatory Offer Thresholds There is no mandatory offer threshold under US fed - eral law. Unlike some jurisdictions, the US does not require a bidder to make an offer for all outstanding shares upon crossing a particular control threshold. That said, regulatory and disclosure regimes, such as HSR antitrust filings and Schedule 13D reporting, impose obligations based on stake size, structure and intent. Sponsors must also assess attribution rules under HSR when multiple affiliated funds, co-inves - tors or portfolio companies hold interests in the same target. State anti-takeover laws and corporate govern - ance provisions (eg, poison pills, staggered boards) can create practical hurdles to creeping control strate - gies, even if no mandatory offer is triggered. 7.4 Consideration Private equity-sponsored tender offers in the US are overwhelmingly structured as all-cash transactions. Sponsors favour cash to provide deal certainty, reduce execution complexity, and align with fund return mod - els. Use of stock consideration is rare in PE-led deals unless the bidder is a publicly listed platform or is partnering with a strategic investor. There are no statutory minimum pricing rules under US tender offer laws, but tender offers are subject to: • equal treatment of shareholders (best price rule); • fiduciary duties of the board (especially in recom - mending the offer); and
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