Paper Example on Blue Wolf Acquires Neenah: Strategic for Future Ops

Introduction

Blue Wolf plans to acquire Neenah is strategic concerning its operations in the future. Neenah Corporation is known to produce a high-quality pulp that has outstanding tensile strength utilized in tissue, writing, and printing papers. Northern Pulp will acquire the company for a nominal sum. Moreover, it will assume liabilities associated as well as assets with the timber business and mill's operations, including the present customer contracts, labor agreements, supply agreements, and pension agreements (Yale School of Management, 2019). Since the amount that will be used by the Northern Pulp to acquire Neenah mill is minimal, the strategic plan and projections by Blue wolf are to improve its quality in pulp production at a lower cost and realized future increased profits and performance. Blue Wolf, as a private equity firm, it was mainly looking for deals that other companies wanted. Blue Wolf adopted a strategy where it targeted the firms that had been rejected in the market during bidding but kept in mind that their pulp was mainly of high-quality. Therefore, it was determined to using a cost-cutting strategy to acquire such firms (Loukianova, Nikulin & Vedernikov, 2017). For a private company, the money that it cost is the amount one is going to have to pay for the firm that one is trying to acquire. Therefore, the willingness to pay is what another company thinks it may be worth after adding whatever value it is to the acquiring company. By acquiring a company that others are not interested in and that has been rejected in the bidding process, Northern Pulp strategically acquired Neenah at a lower price ($10 million, which did not match its value) that proves the likeliness of the company gaining in the future.

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If you were a Blue Wolf stakeholder or board member, would you accept, reject, or alter the course of action? Why?

As a Blue Wolf board member and a stakeholder, I would accept that course of action taken by the company concerning the acquisition of the Neenah mills and all the perspectives that were put in place. For instance, regarding the strategic perspective, it has been shown that the company used a cost-cutting strategy by avoiding the winner's curse that can is frequently realized after a bidding process (Loukianova, Nikulin & Vedernikov, 2017). A company may have won in the bidding process, but the cost accrued becomes higher later on because the value of acquiring a firm does not match what is brought in the purchasing firm. Therefore, the gap is still not closed and may result in future financial constraints. Moreover, I also support the company's financial perspective.

The financial of Northern Pulp, in this case, suggests that the firm considers the considerable overcapacity and industry players that concentrate on the profits as well as the community and consideration on profit-making through cutting costs and improving quality is significant (Zeng, 2017). Therefore, as a board member in Blue Wolf Corporation, I support this move since it assures enhance profitability and performance in the future. The low valuation of the Neenah mills, just over 10 million dollars, shows the financial advantage that the company has taken during acquisition following the fact that Neenah's demand is low in the market (Yale School of Management, 2019). Blue Wolf considers its unique advantages in acquiring this firm and projects that this will allow it to increase profits. Besides, the decision to involve John Hamm as a board member is plausible because he has experience and connections in various sectors (Zeng, 2017). For instance, Mr. Hamm has been a family physician, premier for Nova Scotia government, and a resident of Pictou County. Therefore, he is the best candidate to help the firm enhance government relations and develop better knowledge of the community through corporate social responsibility.

Which factors are essential to consider to make an informed decision about this case? Why?

The Decision-making process, especially when acquiring a company that is not favored in an industry, is a difficult one and needs some deliberations. In this case, Blue Sky has to consider various factors before it acquires Neenah pulp mill. One of the factors that should be considered in this case is the historical operations and performance of the company in the industry (Walford-Wright & Scott-Jackson, 2018). Historically, the Business and Retained Land have been operating in an integrated manner. Neenah is selling the pulp mill to maximize value in separate transactions. Splitting the business from retained land is complicated and results in uncertainties. Therefore, the board should consider this factor because the mill will still need wood chips from retained land at sensible pricing for profitability. Hence, wood costs are important considerations by the Blue Wolf Corporation for its future pulp production and profitability. Another factor to dwell on is considering why logical Canadian strategic firms are uninterested in acquiring the firm. Thus the adverse public market of the assets must be evaluated, including financial challenges resulting from wood chip prices, exchange rates, and energy prices (Walford-Wright & Scott-Jackson, 2018). Potential environmental liabilities form another factor of consideration regarding making a desirable decision before the purchase of the mill. Pulp production leads to environmental pollution, and Blue Wolf has to consider the liabilities it is assuming given that Neenah has been operating in Pictou for over 12 months. Finally, the board members and stakeholders should also consider the trends in the pulp industry to determine the demand of the commodity before the acquisition. Competitive strategies should also be considered for better competition in the future.

What did you find most interesting or important, and why?

In this case, it is interesting to learn that Blue Wolf is willing to acquire a pulp mill that other companies are not interested in as realized in the market. Besides and takes this decision as an advantageous one-making such a decision shows the boldness of the company but also puts it at risk because various factors have to be considered. For instance, the most crucial factor to consider should be the future operations of the mill regarding the cost of wood chips from the Retained Land. Therefore, a practical agreement must be arrived at for desirable future operations and profitability.

How did different organizational functions influence the decision-making process in the Northern Pulp case?

Different organizational functions were determinant in the Northern Pulp case. Design and production function was used by the board members looking at all elements that were essential for production. For instance, Blue Wolf considered capital, labor, information, materials, and energy (Yale School of Management, 2019). Besides, the finance function was the most important because the management determined the best prices to acquire Neenah, considering the available amount and the proceeds that were projected. Moreover, the company also considered the human resources where it was agreed that it would preserve all the workers for continued production (Zeng, 2017). Research and development function was also vital in the case concerning decision-making since the department had to determine the way that existing products would be improved as well as creating new and better commodities.

What is your perspective on the Northern Pulp case? Do you agree with Blue Wolf's approach, or should Blue Wolf and Neenah have considered other options?

It is essential to note that in the Northern Pulp case, Blue Wolf was in the best negotiating position given that the Neenah pulp mill was eager to sell its business. Besides, Blue Wolf was the only company interested in acquiring it because the others in Canada were unwilling. Although the company, at the time, was underperforming and wanted to leave the business, the price at which Blue Wolf acquired it was relatively lower, and the company must have been projecting on returns from its operations. Moreover, Blue Wolf also eyed on the advantage that the Neenah had 576 acres (Yale School of Management, 2019) of reserved land that would be used in supplying the company with wood chips for pulp production, and this suggested that it would increase production a smooth manner. Therefore, from my perspective concerning the case, I would like to note that Blue Wolf move and decision to acquire Neenah were strategic and would benefit both the companies in the future. The operations and performance of the company would be better and profitable through increased competition in the industry. I agree with Blue Wolf's approach, but it would have been better if it acquired everything that was owned by Neenah to ensure total control of both the business and the reserved lands. This would ensure that the company gets wood chips at lower prices because tree production will also be checked in the process.

References

Loukianova, A., Nikulin, E., & Vedernikov, A. (2017). Valuing synergies in strategic mergers and acquisitions using the real options approach. Investment management and financial innovations, (14, 1 (contin.), 236-247.

Walford-Wright, G., & Scott-Jackson, W. (2018). Talent Rising; people analytics and technology driving talent acquisition strategy. Strategic HR Review.

Yale School of Management. (2019). Accelerated Management Program: Module 8 UNIT 2 Video 1 Transcript [Ebook] (pp. 1-5). Yale School of Management.

Zeng, X. (2017, May). Research on the development strategy of product under the strategy of brand merger and acquisition. In 2017 International Conference on Applied System Innovation (ICASI) (pp. 963-965). IEEE.