Brief Definition
The acquisition of subsidiaries refers to the process by which a parent company purchases a controlling interest in another company, which then becomes a subsidiary of the parent company. This process typically involves buying more than 50% of the target company’s voting shares, thereby gaining control over its operations and decision-making.
Further Explanation
The acquisition of subsidiaries refers to the process by which a parent company purchases a controlling interest in another company, which then becomes a subsidiary of the parent company. This process typically involves buying more than 50% of the target company’s voting shares, thereby gaining control over its operations and decision-making.
Example:
Company A, a leading manufacturer of consumer electronics, decides to acquire Company B, a smaller firm specializing in innovative wearable technology. Company A purchases 70% of Company B’s voting shares for $50 million. Through this acquisition, Company A gains access to Company B’s technology and expertise, expanding its product portfolio and market presence in the wearable technology segment.