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City Products Corp. - Lehman Brothers Collection

City Products Corp.

List of Deals

City Products Corporation was incorporated in Ohio in July 1894 as the Independent Ice Company. In December 1908 it acquired City Ice Delivery Company and assumed that name. In February 1921 the company name changed once again, to City Ice & Fuel Company, and in April 1949 the company became City Products Corporation.

Beginning in the 1930s and for the next several decades, City Products pursued an ambitious acquisitions strategy. By the 1960s the company was broadly diversified, with particular strengths in car icing, vacuum cooling, ice manufacturing and distribution, cold storage warehouses, dairies, breweries, distribution of coal and fuel oil, and the distribution of general merchandise.

City Products began its acquisitions in 1930 by acquiring properties of Owosso Ice and Fuel Company, Consumers Ice Company, Moon Lake Ice Company of Grand Rapids, Michigan, City Ice & Fuel, Seaboard Terminal & Refrigeration Company, and a group of ice manufacturing plants in and around Miami, Florida. In August 1933 City Products acquired control of Detroit City Ice & Fuel Company. In 1934 it created a brewery division by purchasing Wagner Brewing Company of Granite City, Illinois, and in 1935 it acquired a 65 percent interest in American Brewing Company of New Orleans and purchased Pilsener Brewing Company of Cleveland, Ohio.

In June 1940 City Products added the ice, coal, and cold storage business of Polar Service Company of Decatur, Illinois. During the same year it also added twenty-seven ice manufacturing and distribution properties in Florida from the Florida Power & Light Company under a long-term lease.

City Products bought the following companies from Commonwealth Utilities Corporation in December 1941: Arizona Ice & Cold Storage Company, Crystal Ice & Cold Storage Company, Galveston Ice & Cold Storage, National Ice & Service Company, New State Ice Company, and Springfield Ice & Refrigerating Company.

It acquired the assets of Midwest Dairy Products Corporation of Du Quoin, Illinois, and Taft Moody Ice Creams of Memphis in 1947 and formed a new wholly owned subsidiary called Midwest Dairy Products Corporation to operate the ice cream and other dairy product businesses they had purchased.

In 1948 City Products purchased the ice business of Consumer Company of Chicago, and in July 1949 it acquired Frank Pilley & Sons, Inc., of Sioux City, Iowa, a manufacturer and processor of dairy and poultry products.

During the 1950s City Products continued with its acquisitions strategy by buying Jersey Gold Creameries of Shreveport, Louisiana, and the dairy business of Cloverleaf Creamery in Texarkana, Texas, both in 1950. In 1952 it purchased Hawthorn Coal Company, Magnolia Ice Cream Company of Jackson, Mississippi, and Franklin Brewing of Columbus, Ohio. In 1954 City Products purchased the twenty-nine Florida ice plants that it had been leasing from Florida Power & Light since 1940. In November 1955 it acquired Goetz Ice Company of Toleson, Arizona, and in 1956 it bought Premier Oil Refining Company of Texas for $3.5 million. At the time, Premier operated refineries at Fort Worth, Longview, and Baird, Texas, and owned a 750-mile pipeline system connecting those refineries with crude oil supplies in East Texas and Ranger fields. It also had a part-ownership in fifty-seven producing wells.

In late 1956 City Products purchased all the ice manufacturing and distribution assets of the Imperial Ice division of California Electric Power. These assets consisted mainly of two large ice-manufacturing plants at Brawley and El Centro, California. Later that year, City Products added some ice manufacturing and storage properties as well as vegetable packing sheds from Shippers Ice Company. Imperial and Shippers were combined into a division to provide refrigerator-car icing services.

In February 1960 City Products purchased Butler Brothers, a general merchandise distributor, for $53 million and assumed their liabilities. In May and October of that same year, it expanded its holdings in this industry by purchasing Bishop & Malco, a Long Beach, California, department store and then added Herst-Allen of Chicago, a supplier to supermarkets and food store chains in the Midwest.

This aggressive acquisitions strategy had a major impact of the financial position of City Products. Sales for the company grew over ten-fold, from $25.6 million in 1940 to $285.5 million in 1961. However, because many of these acquisitions were made with debt or City Product common stock, growth in net income was much less impressive, growing from $2.2 million in 1940 to $4.6 million in 1961.

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