Each day, Benzinga takes a look back at a notable market-related moment that occurred on this date.
What Happened? On May 31, 2007, Wachovia bought A.G. Edwards for $6.8 billion.
Where The Market Was: The Dow closed at 13,627.64. The S&P 500 traded at around 1,530.62.
What Else Was Going On In The World? In 2007, Apple, Inc. (NASDAQ:AAPL) debuted the iPhone. Major League Baseball published the Mitchell Report, a detailed account of the rampant use of anabolic steroids and human growth hormones among professional baseball players. A gallon of gasoline cost $3.38.
Financial Crisis Craziness Begins: In May of 2007, Wachovia and A.G. Edwards combined to form a financial services company that managed $1.1 trillion in assets at the time. The combined company was the second largest U.S. retail brokerage firm.
After reporting a $2.3 billion profit in the first quarter of 2007, Wachovia reported a massive $8.9 billion loss in the second quarter thanks to its exposure to the subprime mortgage market. When Washington Mutual failed in September of 2007, Wachovia’s stock plummeted 27% and the company lost $5 billion in assets in a single day after a number of large clients withdrew funds en masse.
Within a year and a half of the A.G. Edwards deal, Wachovia’s market cap had fallen by $100 billion. By the time Wells Fargo & Co (NYSE:WFC) took over Wachovia in October 2008, the buyout cost them just $15 billion.
