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'Wholly Owned Subsidiary'
Transcript of 'Wholly Owned Subsidiary'
Wholly owned subsidiaries allow the parent company to retain the greatest amount of control, but also leave the parent with all the costs and risks of full ownership. When a lesser number of costs and risks are desirable, or when it is not possible to obtain complete or majority control, the parent company might introduce an affiliate, associate or associate company in which it would own a minority stake. 'Wholly Owned Subsidiary' Definition
A company whose common stock is 100% owned by another company, called the parent company. A company can become a wholly owned subsidiary through acquisition by the parent company or spin off from the parent company. In contrast, a regular subsidiary is 51 to 99% owned by the parent company. One situation in which a parent company might find it helpful to establish a subsidiary company is if it wants to operate in a foreign market.
What are the differences between affiliate, associate and subsidiary companies?
All three of these terms refer to the degree of ownership that a parent company holds in another company. In most cases, the terms affiliate and associate are used synonymously to describe a company whose parent only possesses a minority stake in the ownership of the company.
A subsidiary, on the other hand, is a company whose parent is a majority shareholder. Consequently, in a wholly owned subsidiary the parent company owns 100% of the subsidiary. For example, the Walt Disney Corporation owns about a 40% stake in the History Channel, an 80% stake in ESPN and a 100% interest in the Disney Channel. In this case, the History Channel is an affiliate company, ESPN is a subsidiary and the Disney Channel is a wholly owned subsidiary company. In many cases of foreign direct investment, companies create subsidiaries and affiliates in host countries in order to prevent any negative stigma associated with foreign ownership or negative opinion associated with being owned by a controversial parent company. Definition of 'Acquisition'
A corporate action in which a company buys most, if not all, of the target company's ownership stakes in order to assume control of the target firm. Acquisitions are often made as part of a company's growth strategy whereby it is more beneficial to take over an existing firm's operations and niche compared to expanding on its own. Acquisitions are often paid in cash, the acquiring company's stock or a combination of both.
*Frito-Lay U.S. is an international company, a subsidiary of Pepsico group, dedicated to the marketing of chips and and other snacks.
*The company has presence in over 42 countries, and also generates 13 billion dollars.
Half of the total profits of grupoPepsiCo.
*Frito-Lay is the result of the merger in 1945 of two U.S. companies, The Frito Company and The Lay Company.
*Later, in 1965, PepsiCo joined the group.
*Frito-Lay has over 15 registered trademarks. Bimbo offers snacks throught it subsidiary Barcel.
Chocolates and chewing gum throught Ricolino.
BIMBO recently bought vero candies. *Darwin Mendéz