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Management Side
What's in a name?

Company names are zealously protected and for many companies the name has substantial value because the company name defines the brand or the product through which the company has become successful. It also defines the value of a company beyond its tangible assets; more than the loyalty of customers to the brand (the goodwill) and includes all that contributes to the success of the brand (such as creative personnel, patents, unique processes and products). For some brands, such as Nokia (which, by the way, originally commenced business in 1865 as a one mill pulp manufacturer and remained in the pulp business for more than 100 years) customer loyalty proved to be ephemeral when the Apple iPhone made the Nokia cell phone seem as outdated as the Bell telephone - although ironically Nokia had actually developed a smart phone years before. Nokia still has significant market value of about $7.4 billion (almost what Microsoft paid to acquire Nokia's smart phone business) but insignificant compared with the market value of about $450 billion of its nemesis, Apple.

Company names do change, often as a consequence of a merger (such as Rock-Tenn and MeadWestvaco - itself a combination of a previous merger of Mead and Westvaco - to WestRock) or acquisition when the old name simply disappears or occasionally becomes the name of the combined entity. Sometimes the original name no longer reflects the business of the company as it has evolved or is not consistent with the modern idiom; Sonoco seems much more appropriate than "Southern Novelty Company" in today's predilection for one-word uniqueness.

New names have appeared on the corporate registers of two Australasian companies in the last month, one the result of acquisition and one because the former name was synonymous with monumental corporate failure. Only time will tell if the name changes make any real difference, one way or the other.

Carter Holt Harvey Pulp, Paper and Packaging (CHHPPP) has announced that in future it will be known as Oji Fibre Solutions following its acquisition by a joint venture between Oji Holdings and Innovation Network Corporation of Japan (INCJ) in 2014.

Although the Carter Holt Harvey name was iconic in New Zealand, with a history dating back more than 100 years, pulp and paper only became part of the business with the acquisition of New Zealand Forest Products in 1991 and the company had been a subsidiary of Rank Holdings since 2006.

Oji Holdings, the major shareholder, is one of the largest companies in the global forest paper and packaging sector (US$12.25 billion revenue in FY2014, forecasting US$14 billion in FY2015) and the new name for CHHPPP was selected from an employee competition to reflect its part in Oji's growing global business. Based in Japan, Oji has operations with more than 31,000 employees in China, Vietnam, Malaysia, Thailand, Australia, New Zealand, North and South America, and Europe. This acquisition is Oji's most significant investment outside of Japan and firmly cements Oji in the top ten of pulp and paper companies globally and well ahead of Nippon Paper Company, with whom it has battled for supremacy as the largest Japanese paper company. Interestingly, when Nippon Paper acquired the Australian manufacturing assets of PaperlinX, it chose to retain the divisional name of "Australian Paper". Recent warnings from Australian Paper management that the business may not be sustainable may prove the wisdom of retaining a name that is at arm's length from Nippon Paper should extreme action be taken in the future.

Oji Fibre Solutions employs over 1850 people, producing market Kraft pulp products at Kinleith and Tasman mills in New Zealand's North Island. Containerboard is also produced at Kinleith and at the Penrose (Auckland) recycling mill. Corrugated board and paper bags are produced at eight packaging operations in New Zealand and Australia. The business also includes wastepaper collection services and logistics operations. Oji has been involved in New Zealand since 1971, when it established the Pan Pac Forest Products Ltd (PANPAC) TMP/BCTMP pulp mill and lumber mill.

PaperlinX, which has experienced a rocky history since being spun off from AMCOR in 2000, is now a shell of the company that it became when it challenged the world to be the largest global paper Merchant and Distribution Company. The European businesses are now all gone, along with the North American businesses. What remains is essentially the Australasian businesses and some Asian presence. Perhaps to expunge the shame of failure, investors voted to change the name to Spicers Limited, which aligns the company name to that of its largest Australasian business unit; a change Directors see as symbolic to rebuild the business and signal a new beginning.

The renaming of PaperlinX continues something of a "tradition". PaperlinX was spun off from AMCOR, which had evolved from Australian Paper Manufacturers (itself an outcome of several mergers and acquisitions over more than 100 years), which became APM (formalization of the popular acronym by which the company was known) as it transitioned from being just a manufacturer of paper to a company involved in other packaging materials. That name was not the end game and AMCOR followed soon after, signaling in retrospect that AMCOR saw itself as a global company in which its Australian origins were not relevant (or helpful) and as it transpired, not much interested in the paper business. AMCOR is now truly a global packaging company managed out of Switzerland, even if the Board and a few corporate officers are notionally domiciled in Australia and where its business registry remains.

Over the last few years there have been many annual listings purporting to quantify the value of brands. One of the best known lists has been compiled by Interbrand for Business Week since 2000. This annual brand value study of the world's top 100 brands assesses brand values on a range of factors including strategic brand management, marketing budget allocation, marketing ROI, portfolio management, M&A, balance sheet, licensing, transfer pricing and investor relations. Forbes and others also publish lists, which are a bit different but include most of the same companies.

For many brands the brand is also the company name, such as Coca-Cola and so the company name has huge value. Unsurprisingly no paper company name features in the top 100, paper being essentially a commodity but KCC's "Kleenex" just makes the cut in the Interbrand top 100 brands. For interest the top twenty brands (and also the company name), from number one are Apple, Google, Coca-Cola, Microsoft, IBM, Toyota, Samsung, GE, McDonald's, Amazon, BMW, Mercedes-Benz, Disney, Intel, Cisco, Oracle, Nike, HP, Honda and Louis Vuitton. Apple has been number one since 2013, when it replaced Coca-Cola, which had topped the list since its inception. In case you are wondering, Facebook comes in at Number 23 but with a growth rate of 54% year on year will surely be in the top twenty in 2016.

The value of the brand may not directly reflect the market value of the company and the reasons are not always apparent. Toyota apparently has a market value of more than six times the brand value. Microsoft and Apple have more than 4.5 times the value but Coca-Cola only a bit over two times, consistent with it being arguably the best known brand globally.

So what is in a name? For CHHPPP (now Oji Fibre Solutions), it probably matters little to Customers and the English spelling of "fibre" may confuse rather than enhance on the global stage. In Japan, the new name probably has great cachet and will sit well with the (mainly) Japanese shareholders. For PaperlinX, now Spicers, it is probably essential to the survival plan but shareholders have long memories and if the future financial results for 'Spicers' do not match the rhetoric, the new name will be consigned to the same oblivion that is now the destination for the PaperlinX brand, along with the careers of those leading the change.


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