🠈 City Investing Company 🠊
City Investing Company
I've been writing articles about the consolidation of industry in the United States. What people miss when investigating mergers is the large number of conglomerates that fail.
City Investing Company was a huge conglomerate that chose to liquidate itself in 1984. The firm owned several notable companies including Motel 6, Rheem (which manufactures air conditioning systems), World Color Press (the largest publisher of illustrated works), General Development Corporation (which worked on public/private ownership in cities), along with several insurance companies and savings and loans.
I decided to make this page to start following the transactions involved in the company.
Assets included Home Insurance Company, Federal Home Life Insurance Company, Rheem Air Conditioners, World Color Press, General Developemnt Corporation, Guerdon Industries, Motel 6, Red Barn and California Savings and Loan.
- 1968: City acquired Motel 6 to help accelerate expansion.
- 1968: City acquired World Color.
History of World Color
World Color was the primary printer of Sunday comics inserts and Comic Books including contracts with DC Comics and Marvel. The company continued to expand after the collapse of City Investing. It is now part of Quad/Graphics
- 1904: The St Louis Star created World's Fair Color Printing for the St. Louis World Fair. The press began printing cartoons after the event.
- 1922: Robert Grable and Roswell Messing, Sr. purchased the company with contracts to print the funnies for other papers.
- 1928 World Color acquired St. Louis based Commercial Color Press which printed newspapers and circulars.
- World Color became the largest publisher of cartoons and comic books including contracts with Marvel and DC Comics.
- 1975: Sales topped $371 million.
- 1968: City acquired Rheem Manufacturing Company
History of Rheem Manufacturing
Rheem was founded by the sons of William S. Rheem (1862–1919) who was the president of Standard Oil. The company originally created galvanized oil drums. They expanded into heating and later air conditioning products..
- 1925 Richard S. and Donald L. Rheem founded a company to create galvanized steel drums in Emeryville, Ca. Their dad was head of Standard Oil.
- 1930: The company incorporated as Rheem Manufacturing Company and acquired the assets of Republic Steel Package Company which produced steel packaging and boilers.
- 1931: Rheem acquired John Wood Manufacturing Company which manufactured gas storage water heaters.
- 1937: Rheem offered stock to the public.
- 1940: Rheem became the country's largest manufacturer of steel shipping containers and water heaters.
- 1942: Rheem purchased the American Radiator and Standard Sanitary Corp plant in Birmingham, Alabama to produce ordnance materials.
- 1940-45 Rheem turned to war time production.
- 1943 Bethlehem Steel Corporation bought a 35% interest in Rheem (230,000 shares of common stock)
- 1944: Rheem acquired the Stokermatic Company in Salt lake City which made coal water heaters.
- 1944: Rheem purchased the Atlas Steel Barrel Division in Bayonne, NY from Bethlehem Steel Corp.
- 1947: Rheem purchased the Frazer line of gas furnaces and air conditioners.
- 1951: Rheem purchased the range boiler and tank business of Wheeling Steel Corp. .
- 1956: Rheem moved its headquarters to NYC.
- 1956: Rheem acquired Richmond Radiator Company in Metuchen, NJ.
- 1956: Rheem acquired the Standard Enameling Company.
- 1956: Rheem acquired majority interest in Califone Corp which sold tape recorders and sound systems.
- 1960: Rheem purchased the water heater business of Ruud Manufacturing Company.
History of Ruud
- 1889: Ruud was founded by Edwin Ruud (1854–1932) to develop a gas fire water heater that he developed while working for Westinghouse.
- 1913: Ruud acquired the Humphrey Company of Kalamazoo, Michigan, which also made water heaters.
- 1960: Rheem acquired Dudley Steel Corporation of Paramount, Ca to create the Rheem-Dudley Building Division which created steel buidlings
- 1961: Rheem acquired Orendorff Manufacturing which made products for agriculture and road building.
- 1965: Rheem acquired Superior Tank and Construction Company, Vulcan Steel Tank Corp of Tulsa, the remainder of Dudley Steel and Tipper Tie, Inc of Union, NJ.
Founding of General Development Corporation
GDC developed planned communities in Florida. It built the streets, sewers, water systems, etc for the towns. The company sold the lots on ten year plans. The costs proved higher than the fees collected. The planned communities included: Port LaBelle, Port Charlotte, North Port, Port St. John, Port Malabar, Port St. Lucie, Sebastian Highlands, Deltona and Key Biscayne. The company was mired in lawsuits after City divested the asset.
- 1954: The Mackle Brothers (Elliot, Robert, and Frank jr) founded the firm. They marketed lots in Florida nationwide.
History of United Servomation
- 1960: United Servomation was created with the merger of 11 vending machine companies. They had 18 million in sales and netted $800,000.
- 196?: Reports linked cigarettes to cancer. Servomation reduced cigarette machines and positioned itself as a food service company.
- 1963: Servomation acquired A. L. Mathias Co. which made vending machines.
- 1963: Servomation opened Singing Waters and Mr. Bill's restaurants which involved frozen food and microwave ovens.
- 1966: Servomation acquired Acme Vending based in Minneapolis.
- 1973: Servomation changed its name to Servomation Corporation.
- 1967: Servomation acquired the Red Barn
History of Red Barn
Red Barn was a chain of fast food restaurants that were built to look like classic red barns. The company grew to over 300 restaurants. City stopped advertising the chain in the 1980s. City did not find a buyer and let the chain fail. The site BarnBusters.net has photos of the chain.
- 1961: Don Six, Martin Levine, and Jim Kirst opened the first Red Barn in Springfield, Ohio.
- 1963: Richard O. Kearns acquired the chain through Red Barn System based in Dayton, Ohio.
- 1964: Kearns moved the headquarters to Fort Lauderdale, Florida.
- 196?: United Servomation acquired Red Barn.
The Liquidation of City Investing
City Investing had grown to a huge corporation with disparate entities. They chose to engage in a complete liquidation. It appears that KKR acquired many of the assets. They let the Red Barn fail. In this section, I examine the fates of the companies.
- 1984: The holding company City Investing Co Liquidating Trust began to liquidate assets.
- 1985: Kohlberg, Kravis, Roberts & Company and Merrill Lynch formed a holding company called Pace Industries which acquired the US and Canadian assets of Rheem.
The Continued Story of Rheem
- 1985: Pace acquired Raypak, Inc of West Lake Village.
- 1988: Paloma Industries of Nagoya Japan acquired Rheem.
Early History of Paloma Industries
Paloma Industries is a Japanese based firm which manufactures HVAC and related equipment.
- 1911: Saburo Kobayashi founded the firm in Nagoya, Japan.
- 1931: The firm took the name Kobayashi Factory.
- 1952: The company introduces the Paloma brand.
- 1964: The company changed its name to Paloma Industries.
- 1973: Paloma opened a shop in Chicago.
- 2002: Paloma acquired the Australia, New Zealand, and China water heater operations from Southcorp Holdings.
- 2004: Paloma reported sales of ¥240 billion ($2 billion).
- 2011: Paloma consolidated as Paloma Co. Ltd
- 1984: Kohlberg Kravis Roberts & Co. acquired World Color.
Continued History of World Color
World Color (see start) continued to thrive with KKR acquiring additional printers. The company succumbed to new media and filed for bankruptcy and was acquired by Quad/Graphics.
- 1989: World Color acquired Chicago's Bradley Printing based in Chicago.
- 1991: World Color acquired George Rice & Sons based in California.
- 1993: World Color acquired Alden Press.
- 1996: World Color acquired Ringier America.
- 1997: World Color purchased the Book Service department of Rand McNally making World Color the second largest publisher in the US.
- 1999: World Color merged with Quebecor Printing in a $2.7 billion deal to create Quebecor World (USA) Inc. with headquarters in Montreal.
- 2008: The company lost sales to new printing technologies and they filed Chapter 11 bankruptcy.
- 2009: Company emerged from bankruptcy as
- Worldcolor Press
- 2010: Quad/Graphics purchased Worldcolor. Quad trades on the NYSE with the symbol: QUAD.
- 2011: Quad launched an asset swap with Transcontinental Inc. It exchanged facilities in Mexico for facilities in Canada.
- 2013: Quad acquired Vertis Holdings, Inc.
- 2018: Quad acquired LSC Communications in an all stock deal estimated at $1.4 billion.
- 2018: Quad acquired Periscope, an ad agency, for $132 million.
- 1985: Kohlberg, Kravis, Roberts & Company (KKR) acquired Motel 6 for $881 million (see the Motel 6 link for details).
- 1985 Allegheny Beverage Corp used debt financing and purchased Servomation for $225 million which it merged into its Macke division which it renamed as Service America Corporation which they valued at $1.2 billion.
Fate of Service American Corporation
- 1987: The division floundered un Allegheny. Senior management with funding by Morgan Lewis Githens and Ahn, Inc. and Merrill Lynch created Servam which purchased division for $450 million.
- 1990: Service America arranged a debt equity swap for $400 million in debt owed primarily to GE Capital Corp.
- 1992: Service America had a $63 million loss and filed chapter 11. (I couldn't find any more info).
- 1988: City allowed all the Red Barn leases and franchise agreements expire. The chain subsequently failed. Some franchises to rebrand as The Farm.
- Funding Universe - Service America (Drawn 5/7/2019)
- Paloma Global History (Drawn 5/8/2019)
- Ashrae Madison - Rheem Time Line (Drawn 5/8/2019)
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