Business Combination under Common Control?

[Tre-Lois]

Hello all - I'm reaching out to gain some insights into a specific transaction scenario that I'm trying to understand if it would be considered a 'business combination under common control'. Attached is an outline of the proposed transaction.

B is intending to acquire 100% of Entity D from Entity C. Assume all entities involved (A, B, C, D) are 100% owned within the relationship chain. The aim of this transaction is to facilitate a future merger between B & D. Both Company B and Company A prepare consolidated financial statements.

I need a sense check, but am I correct in thinking that this transaction would not impact the consolidated financial statements of either Company B or Company A. Is there anything that needs to be considered when accounting for this transaction (for example related to BCuCC).

Many thanks in advance.

[JRSB]

correct. but there is impact in standalone accounts.

[Tre-Lois]

Thank you JRSB.

With regards to B's stand alone accounts - would the impact be that it would recognize an extra subsidiary at cost (assuming this is their policy). Or is there a additional impact that I have missed?

[JRSB]

Yes most likely, other impacts depend on how the restructure was achieved.

[Tre-Lois]

B will acquire D with a 'normal' SPA for consideration equal to the fair value of D's net assets.

Does this scenario fall under the scope of BCuCC? This is a combination in which B, C and D are still ultimately controlled by the same party (A), both before and after
the combination.

[Marek Muc]

That's a typical BCUCC scenario