On this day in economic and financial history. . .
The Standard Oil monopoly was broken in 1911. On Nov. 30, 1999, Exxon and Mobil, its two largest fragments, joined to once again create the world's largest publicly traded oil company. The $81 billion ExxonMobil (NYSE:XOM) was the largest merger in American history, eclipsing 1998's $72.6 billion Citigroup (NYSE:C) merger -- although the Citigroup merger had a larger impact on the national economy, as it forced Congress to tear down Glass-Steagall to make it legal.
The deal, which valued Mobil at $80 billion and Exxon at $76 billion when first publicized, created a behemoth. The Wall Street Journal reported later that Exxon and Mobil had combined 1997 profits of $11.8 billion on $203.1 billion in revenue. Together, the two companies employed 122,700 people and had more than 48,000 branded service stations, with larger combined energy reserves than Canada. To pass regulatory scrutiny, the new company agreed to sell over 2,400 of those stations.
Despite the new company's size, it wasn't even the largest component of the Dow Jones Industrial Average (DJINDICES:^DJI). The index had recently added both Intel (NASDAQ:INTC) and Microsoft (NASDAQ:MSFT), which were at the time very near their largest sizes. Microsoft closed Nov. 30, 1999 with a market cap of $468 billion, and would peak by the end of the year at over $600 billion. Intel's market cap at the time was $255 billion, and it would be nine more months until the chipmaker peaked at a market cap of over $500 billion. Meanwhile, it would take ExxonMobil nearly a year from the completion of its merger to reach a $300 billion market cap. By that point, Intel had dropped precipitously, but Cisco (NASDAQ:CSCO) remained inflated enough to hold the market-cap crown until 2001.
Less than two months after the ExxonMobil merger, AOL (NYSE: AOL) set an all-time high-water mark in the mergers and acquisitions space, announcing its intent to acquire Time Warner (NYSE:TWX) for $182 billion. ExxonMobil's merger has fared far better. A decade after its merger, its market cap was well over $300 billion as the economy climbed back from a devastating financial crisis. A decade after the AOL-Time Warner merger, AOL had been ignominiously kicked out of the company it once acquired, and its market cap was less than 2% the size of the original deal.
Let's make a deal
ExxonMobil wasn't the only big deal that took place on Nov. 30. A year earlier, on Nov. 30, 1998, Deutsche Bank (NYSE:DB) made a $10.1 billion offer to acquire Bankers Trust. The proposed deal was to create the world's largest bank by assets, totaling over $800 billion, more than Switzerland's UBS (NYSE:UBS).
The deal wasn't without controversy. Bankers Trust was then embroiled in a legal fiasco, the result of some extremely dodgy accounting tricks that defrauded several states. Bankers Trust admitted to a felony in the ensuing case, which would have crippled its operations had Deutsche Bank not stepped in to take over its assets.
Deutsche Bank's status as the world's largest didn't last long. Less than a year later, three Japanese banks agreed to merge, leapfrogging Deutsche Bank in the rankings. In the decade that followed, Deutsche Bank maintained its leading position in global bank rankings by assets. Ten years after the merger, Deutsche Bank was still the largest continental European bank by assets, but it had slipped to third overall in the global rankings, behind British institutions Royal Bank of Scotland (NYSE:NWG) and Barclays (NYSE:BCS).
Billie Jean is not my lover
Nov. 30 has also been host to groundbreaking artistic achievements as well as impressive financial accomplishments. Michael Jackson's Thriller was released on Nov. 30, 1982. The performance innovations that flowed from it helped establish the style of modern pop music, gave Viacom's (NASDAQ: VIA) MTV a tremendous boost in popularity, and turned Michael Jackson into an uber-wealthy global music phenomenon. Thriller remains the world's best-selling album, with 110 million estimated copies sold as of 2009.
Thriller also gave rhythm-inclined people everywhere two iconic dances to imitate: the moonwalk, and the synchronized Thriller zombie dance, which has been recreated in viral videos by prisoners, wedding parties, and even robots.
On Nov. 30, 1965, Ralph Nader first published his landmark auto-safety book Unsafe at Any Speed. The book opened American eyes to the hazards inherent in many autos of the day, which tended to offer "safety features" optionally, if they were offered at all. Nader took particular issue with General Motors' (NYSE:GM) Chevy Corvair and its swing-axle suspension, as well as other design choices that made the vehicle less safe. Nader also highlighted a perception of anti-safety lobbying by auto manufacturers.
GM's response was so aggressive and intrusive toward Nader that its president was forced to apologize to him before a Senate subcommittee. The book destroyed the Corvair, however, and the car -- despite apparent vindication in later Department of Transportation testing -- was soon off the market.
By 1970, the United States government passed the Highway Safety Act, which established the National Highway Traffic Safety Administration, or NHTSA. Despite this concerted push for greater safety, later research by GM safety researcher Leonard Evans showed that other countries had done significantly better at reducing their vehicular fatalities than the United States. The NHTSA's mandate requires that safety features undergo a cost-benefit analysis before becoming mandatory. Only those features that are projected to save more money in damage and health care costs than they cost automakers to implement will be made mandatory.
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