Hesson Office Supplies, Inc. HOS is a distributor of office equipment, furniture, and supplies. HOS has wholly owned subsidiary, Belknap Equipment Company, a manufacturer of office equipment. HOS has been discussing with Tykes Office Equipment the possibility of forming a new business entity. Tykes also have a wholly owned subsidiary, Reddington Office Furniture, a manufacturer of office furniture and fixtures.
The cases are concerned with actual companies HOS and Tykes have tentatively agreed that they will exchange their entire interest in their wholly owned subsidiaries, Belknap Equipment Company and Reddington office …show more content…
A business combination also referred to as a merger, acquisition, or takeover occurs when one company obtains control over another company. Over all control of interests in other companies
A subsidiary is a company with voting stock that is more than 50% controlled by another company, usually referred to as the parent company or the holding company. A subsidiary is partly or completely owned by the parent company, which holds a controlling interest in the subsidiary company. Subsidiary company is a separate distinct legal entity for tax regulation and liability purposes.
Wholly owned subsidiary is a company with its common stock is 100% controlled by the company. Wholly owned subsidiary company can control all production, management, and profits. But also share costs and responsibilities.
When two competing firms like HOS and Tykes combine, competition is reduced. Similarly, if a new firm enters an industry by acquiring an existing firm, the number of competing firms remains unchanged. The combination can lead to increased sales overall, if the combined firms have complementary products or