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interest to Hillblom and Dalsey, each of whom owned 50 percent of
petitioner as of November 1972, and Dalsey retired in 1984, and
his shares were redeemed or transferred to other shareholders.
Petitioner’s initial business activity was to pick up and
deliver time-sensitive documents and small packages by means of
regularly scheduled domestic airline flights between Hawaii and
California. During 1970, a California corporation was formed to
handle documents and packages between Los Angeles and San
Francisco. Hillblom recruited John T. Atwood (Atwood) and
William A. Robinson (Robinson) from another courier service to
operate the Los Angeles to San Francisco business, which was
merged with DHL on November 11, 1972, at which time Robinson and
Atwood were each given a 7-percent stockholding interest in DHL.
During 1972, a station was established in Hong Kong and
incorporated there under the name Document Handling Limited,
International (DHLI). DHLI was incorporated in Hong Kong on
March 14, 1972, and its stock was owned 99 percent by DHL and 1
percent by Dalsey. Po Chung, a Hong Kong resident, was recruited
by Dalsey to act as DHLI’s first manager. By late 1972 or early
1973, DHL was also offering service through a variety of entities
to Guam, Hong Kong, the Philippines, Japan, Thailand, Australia,
and New Zealand.
The national and international expansion of DHL’s activity
was accomplished by employees and/or stockholders going to a new
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