Victory Refrigeration, Inc.

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Victory Refrigeration, Inc.

110 Woodcrest Road
Cherry Hill, New Jersey 08003
U.S.A.
Telephone: (856) 428-4200
Fax: (856) 428-7299
Web site: http://www.victory-refrig.com

Wholly Owned Subsidiary of Aga Foodservice Group plc
Founded: 1944
NAIC: 333415 Air-Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing

For more than half a century, Victory Refrigeration, Inc., a subsidiary of the United Kingdom's Aga Foodservice Group plc, has been manufacturing commercial refrigeration equipment for the food service industry. High-end products include blast chillers, both reach-ins and roll-ins, that are used to cool food as quickly as possible to prevent possible contamination; rapid thaw refrigerators; a wide range of regular, extra wide, and shallow depth refrigerators; a similar array of storage freezers; dual temperature refrigerators and freezers; undercounter refrigerators; a variety of display and merchandiser refrigerators; modular proofers for baked goods; and warming cabinets. Victory also offers its "Value Line" of equipment, including regular size refrigerators; refrigerators with clear front panels; compact undercounter refrigerators; refrigerators combined with sandwich, salad, pizza, and general food preparation tables; merchandisers with glass doors; bottle coolers; and reach-in freezers. All told, Victory offers 1,800 different models, sold around the world through a network of distributors. The company maintains its headquarters in Cherry Hill, New Jersey, close to Philadelphia, Pennsylvania.

WORLD WAR II-ERA ROOTS

Victory was begun in 1944 in Philadelphia by a pair of sheet metal specialists named Ray Constantini and Tony D'Angelis. Like many companies at the time it drew its name from war-related words like "Allied" and "Victory." In fact, the business was very much part of the war effort. The metal shop served the Philadelphia Naval Shipyard, the country's first naval shipyard and one that reached its peak of activity during World War II, employing 40,000 people, while building more than 50 ships and repairing nearly 600 others. Constantini and D'Angelis had both been employed at the shipyard and now, working out of a garage, they supplied the Navy with a variety of fabricated stainless steel products, including sinks, worktables, and lockers.

When the war came to an end, work at the shipyard fell off dramatically, forcing Constantini and D'Angelis to seek out a new source of customers. They found it in Philadelphia's fast-growing foodservice industry. With the war at an end, the U.S. economy, after a brief recession, began to boom. Servicemen returned home, got married, moved to the new suburbs, and began to raise the Baby Boom generation. They also sought out entertainment as never before and that meant eating out. Not only did a large number of restaurants, diners, and coffee shops open for business, pizza parlors proliferated and many of today's fast food restaurant chains began to take root. All of them required commercial refrigeration equipment, fashioned from stainless steel, and the Victory metal shop evolved into Victory Refrigeration to meet that growing need and became an industry pioneer. The business soon outgrew its space and in 1954 the company moved to the Philadelphia suburb of Plymouth Meeting, Pennsylvania, where it opened a 125,000-square-foot plant. Here, Victory continued to build a reputation as an innovator, introducing such features as self-closing doors, urethane foamed-in-place insulation, and top-mounted, "plug box" refrigeration systems.

Victory operated as an independent company until 1973 when it was acquired by McGraw-Edison Co. and folded into that corporation's group of foodservice equipment subsidiaries. The lineage of McGraw-Edison reached back to the great inventor Thomas Edison and his company, Thomas A. Edison Inc., manufacturer of office dictation machines and automated teaching equipment. In 1957 it was acquired by McGraw Electric Co., which had been established by Max McGraw who, as a teenager in Iowa around the turn of the century, was an electrical contractor. McGraw moved beyond wiring houses and hooking up door bells when he bought a Chicago toaster manufacturer in 1926 and formed McGraw Electric Co. to make appliances. The company grew through a series of acquisitions, including such divergent businesses as Edison and foodservice equipment companies. By the mid-1960s sales approached $500 million for McGraw-Edison, which was producing high voltage electrical equipment, components, and systems, as well as such appliances as toasters, air conditioners, blenders, clothes washers, and power drills. With Victory Refrigeration added to the fold, along with other acquisitions, McGraw-Edison was generating more than $1 billion in sales. Under McGraw-Edison, Victory, in 1977, expanded its product offering, introducing its line of food processing products. These included rapid thaw cabinets, blast chillers, and blast freezers.

McGraw-Edison was just one of several changes in ownership that Victory would experience in the final decades of the century. McGraw-Edison experienced an erosion in earnings in the 1970s and decided to exit its consumer businesses. At the end of the decade it took on considerable debt to acquire locomotive manufacturer Studebaker-Worthington. Then, in 1980, to help pay down its accumulated debt, McGraw-Edison divested its foodservice group, including Victory Refrigeration, selling it to Bastian International Holdings, a New York City-based company with a pair of subsidiaries: BIH Foodservice Inc. and Bastian-Blessing Foodservice Equipment Co. Victory would be part of the Bastian family for five years.

NEW JERSEY MOVE: 1989

In 1985 assets of the two subsidiaries were sold to Hussman Corp., a unit of IC Industries Inc., formerly known as Illinois Central Industries, the holding company for the Illinois Central Railroad, founded in 1962. With the rail industry struggling, the company diversified into a number of areas, including aerospace, real estate, and consumer goods such as Whitman Chocolates. To reflect its move away from the railroad industry and a new focus on consumer goods and services, the company changed its name to Whitman corporation in 1988. Hussman manufactured gas stoves and refrigeration equipment for the food service industry, making Victory a natural fit. While part of Hussman, Victory moved to Cherry Hill, New Jersey, when it opened a new 250,000-square-foot plant in 1989. By this time, however, Whitman was looking to sell Hussman's foodservice equipment assets, as well as other businesses, in order to focus on consumer products. Whitman attempted to sell Hussman assets to Japan's Sanyo Electric Co. Ltd. and other others, but, displeased with the offers generated, briefly pulled it off the block. Finally an acceptable offer of $62.5 million was received from Middleby Corp. in May 1989 and the business, including Victory, was sold.

COMPANY PERSPECTIVES

With a broad and flexible product line, exclusive features, unsurpassed quality, and excellent service, Victory Refrigeration has earned a reputation for "Refrigeration at its best."

Based in Morton Grove, Illinois, Middleby grew out of Middleby Marshall Oven Co., a company with a heritage that dated back to the 1800s when bakery supply company owner Joseph Middleby and engineer John Marshall got together and began making custom designed movable ovens. One hundred years later the company made a name for itself with its patented conveyor ovens that could bake pizzas in one-third the time as a conventional oven, making it the ideal choice for such pizza chains as Pizza Hut and Domino's. In the late 1980s the company looked to expand into other types of foodservice equipment, such as electric food mixers. By acquiring Hussman, Middleby picked up four business lines with recognizable foodservice industry brands: Southbend, maker of heavy duty cooking equipment; Toastmaster, which produced cooking and warming equipment for the foodservice industry (a separate company, Toastmaster, Inc., produced consumer products under the same brand name); Seco (Southern Equipment), manufacturer of holding and serving systems; and Victory refrigeration.

Middleby was soon displeased with the Hussman transaction, however. After Middleby was unable to gain satisfaction from Hussman's management, in May 1990 it took Hussman to court, alleging fraud and breach of contract and asking for $30 million in damages. At the heart of the matter was the financial state of Southern Equipment, which Middleby maintained Hussman's executives had said prior to the sale was a profitable business. Afterwards, when it finally received copies of financial statements, Middleby learned that Southern Equipment had lost money in 1989. As a result, Middleby, which had planned on selling the unit for $15 million, was only able to find a buyer at less than $8. Moreover, the lawsuit charged, according to the Chicago Sun-Times, that "Hussman officials failed to disclose the deterioration of Victory's customer base and its bad relations with some of its remaining customers." One Hussman executive called the lawsuit "a crock of banana oil." A jury thought otherwise and in October 1992 awarded Middleby $27 million, an amount later set aside by a judge due to a technicality. In the end, the two parties agreed to an out-of-court settlement of $19.5 million in 1993.

For many years, Victory had operated as a standalone business with the framework of a large corporation. Middleby was much smaller and took a greater interest in growing the business. Victory had been concentrating on contracts and high end of dealers, but now took steps to serve the entire foodservice market. In addition, the company retired the Raetone brand, which it had been using for less expensive, basic products. Now the Victory name was carried by the full gamut of the company's products. Victory also placed more emphasis on customer service, a move that would go along way to restoring the company's image with disgruntled customers. Victory also took steps to improve its manufacturing processes and the shortening of the lead time required to have Victory equipment installed. The company also expanded into a new area in 1993 when it produced a merchandiser for Coca-Cola USA and gained entry to the beverage equipment industry. In addition, two years later Victory introduced a new line of specification products.

TAKEN INDEPENDENT: 1997

In 1996 Victory was generating sales of about $40 million, but by this point Middleby was looking to concentrate on its core cooking and warming equipment divisions and to beef up its international business. In November 1996, the company announced that it was selling Victory to a management-led investment group. The deal was completed in early 1997, and for the first time in more than 20 years Victory was an independent company. It was an arrangement that would be short lived, however, as the business was soon put up for sale and considered by a number of suitors. In July 1999 a United Kingdom engineering conglomerate, Glynwed International PLC, paid $24.5 million for Victory.

KEY DATES

1944:: Victory is founded as a metal shop in Philadelphia, Pennsylvania.
1954:: The company moves to Plymouth Meeting, Pennsylvania.
1973:: McGraw-Edison Co. buys the company.
1980:: Bastian International Holdings acquires Victory.
1989:: Victory is sold to Middleby Corp. and moves to Cherry Hill, New Jersey.
1997:: Victory is acquired by a management-led investor group.
1999:: The company is acquired by Glynwed International PLC.
2001:: Glynwed becomes Aga Foodservice Group.

A few years prior to the Victory acquisition Glynwed was comprised of such divisions as Foundry Products, Metal Services, Steels & Engineering, Tubes & Fittings, Plastics and Properties, and Consumer Products. Then, in 1997, the company began a reorganization that one year later left it with just two core divisions: Pipe Systems and Consumer & Foodservice Products. Through the Falcon Catering Equipment subsidiary Glynwed had become the United Kingdom's largest foodservice equipment maker. It became even larger in 1998 when it acquired Williams Refrigeration, the leading U.K. commercial refrigeration company. The purchase of Victory was a good fit for Glynwed because it provided a foothold in the United States, and the capabilities of Victory and Williams complemented one another. Williams could make use of Victory's North American distribution network, while Victory could take advantage of William's superior technology in blast chillers and cold rooms. Moreover, Glynwed could sell Williams products in the United States under the Victory brand and Victory products in the United Kingdom under the Williams name.

In 2001 Glynwed made an even greater commitment to its foodservice equipment and consumer businesses by selling its pipe systems division. The company subsequently changed its name to Aga Foodservice Group. Under its new corporate parent, Victory continued to introduce products. A new line of glass door merchandisers, the VM Series, was introduced in 2000. In 2002 Victory brought out its new Big Top Salad/Sandwich Refrigerator line of worktop refrigerators. A pair of new product lines, Deep Well Bottle Coolers and Modular Proofers, were added in 2004. The company also introduced three models of a refrigerated mobile bar caddy. Moreover, Victory was improving the quality of its products, enough that in 2005 it was able to double the standard one-year industry guarantee to two years. The products simply needed less service, and in order to make this a marketing advantage, the company touted what it called its V2E Pledge. With a well respected brand name and backed by a supportive corporate parent, Victory appeared well positioned to enjoy steady growth for years to come.