Holding Company Examples
Holding Company examples include the example of Google restructuring itself and creating a parent company called Alphabet Inc. under which is now all its diverse portfolio of business and the Berkshire Hathaway owned by Warren buffet is another great example of holding company which works in Investment space.
The following Holding Company examples provide an outline of the most popular holding companies. A holding company is an entity that holds controlling interests in other companies. Controlling interest is defined as the ownership of 50% or more of the company shares, which also provides the holding company with the authority to make management decisions, influence and control the board of directors. A holding company is thus also known as the ‘parent’ while the companies held under it are its ‘subsidiaries’.
Each example of the Holding Company states the company business, subsidiary companies with additional comments as needed.
Below are some of the examples of popular holding companies from different industries:
Example #1 – Alphabet Inc.
We are all very familiar with the computer software and search engine company Google. In the year 2015, Google underwent a corporate restructuring and was re-organized as a subsidiary of Alphabet, Inc., a newly formed parent company holding Google and many other related subsidiaries.
Alphabet Inc. is a multinational conglomerate headquartered in California and has no business operations of its own. It owns a substantial amount of intellectual property through its subsidiaries and is entirely driven by the earnings, cash flows and assets of its subsidiaries. Over 85% of its total revenues in FY2018 were generated from its primary business – advertising.
- Alphabet, Inc. was formed with an underlying intention of narrowing the business scope of Google, for it to focus on its core business and creating a better scale of management by running Google’s subsidiaries separately. The subsidiaries held under Google at the time of restructuring were thus transferred to Alphabet Inc.
- Google’s founders, Larry Page, and Sergey Brin moved to the management of Alphabet as CEO and President respectively, making Sundar Pichai the new CEO of Google.
- Google’s ticker symbols GOOG and GOOGL are retained by Alphabet Inc. and these stocks continue to trade in the same way with the same price history, on the NASDAQ Stock Exchange. Alphabet Inc. reported a firm-wide (consolidated) revenue of $136.8 billion and a net income of $30.7 billion, in FY2018.
- The subsidiaries owned by Alphabet, Inc. include Calico, CapitalG, Chronicle, DeepMind Technologies, GV (formerly Google Ventures), Google Fiber, Jigsaw, Makani, Sidewalk Labs, Verily, Waymo, Loon, etc.
Example #2 – Sony Corporation
Another famous holding company is Sony Corporation, a multinational conglomerate headquartered in Tokyo, Japan. A popular brand name today, well heard of when it comes to electronics, music, the PlayStation and other games, Sony was founded by Akio Morita and Masaru Ibuka in the year 1946.
It is now a public company with common stock listed on the Tokyo Stock Exchange and New York Stock Exchange (NYSE) with the symbol SNE. In FY2019 (year ended March 2019), the company reported firm-wide revenue of 8665.7 billion JPY and net income of about 419 billion JPY.
- Sony Corporation operates a wide array of businesses such as entertainment, electronics, gaming, telecommunications, etc.
- The major subsidiaries under Sony Corporation are Sony Electronics Inc., Sony Global Manufacturing & Operations Corporation, Sony Interactive Entertainment Inc., Sony Mobile Communications (formerly Ericsson), Sony Music Entertainment (formerly CBS Group), Sony Network Communications Inc., Sony Pictures Entertainment (including Columbia Pictures as a division), etc.
- Just like Google, some of these subsidiaries themselves hold controlling interests in other companies.
- For example, Gaikai, an American gaming technology provider, is a subsidiary of Sony Interactive Entertainment Inc. In this example, therefore, the latter is also a holding company.
Example #3 – JPMorgan Chase & Co.
JPMorgan Chase & Co. is one of the largest players in the global investment banking and financial services industry. Incorporated in December 2000, through the merger of JPMorgan and Chase Manhattan Bank, it is a multinational public company headquartered in New York, United States.
Its common stock is listed on the NYSE with the symbol JPM. The current chairman and CEO of the company are Jamie Dimon.
- In FY2018, the company reported a firm-wide managed revenue of $111.5 billion and net income of $32.5 billion.
- JPMorgan Chase & Co. has over 40 subsidiaries worldwide in the fields of asset & wealth management, corporate & investment banking, commercial banking, consumer & community banking.
- The most significant of these subsidiaries are JPMorgan Chase Bank, JPMorgan Asset Management Holdings Inc., JPMorgan Securities LLC, and Chase Bank USA.
Example #4 – Johnson & Johnson
Incorporated in the year 1887, Johnson & Johnson is a multinational holding company headquartered in New Jersey, United States. It is a popular brand name in households all over the world, especially for first-aid and baby care products.
The company is involved in research and development, manufacturing and sales of pharmaceuticals, medical devices, health and well-being products, and other related consumer products.
- It is a publicly listed company with its common stock listed on the New York Stock Exchange, with JNJ as the symbol.
- In FY2018, Johnson & Johnson reported firm-wide revenues of $81.5 billion and net income of about $15 billion.
- It has over 260 operating subsidiaries with a worldwide presence, as of December 2018. These subsidiaries own several patents related to their products and formulations.
- Some of its major subsidiaries are Cordis Corporation, Ethicon, Inc., Janssen Biotech, Inc., Johnson & Johnson Pharmaceutical Services, McNeil Consumer Health, Neutrogena, etc.
Conclusion
A holding company is the parent of various companies controlled under it which are known as its subsidiaries. Common examples of holding companies are conglomerates owning companies in various industries. This means a wide range of products and/or services may be offered under one umbrella.
As observed in the above examples, the financial statements of holding companies provide a consolidated view of their performance as a whole, i.e. accounting for all of their subsidiaries.
A subsidiary may further hold controlling interests in other companies, thus being a holding company itself, although with a separate ultimate parent.
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