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Watson to buy rival drug firm

Watson Pharmaceuticals Inc., which makes generic versions of Valium, Percocet and other drugs, said Monday that it reached a deal to acquire rival drug manufacturer Andrx Corp. for about $1.9 billion in cash.

If approved, the deal would create the nation's third-largest generic-drug maker based on prescriptions dispensed, Watson said.

The agreement calls for Corona-based Watson to pay $25 a share for Andrx, a 32 percent premium to the stock's average trading price over the past 30 days.

Shares of Andrx jumped $2.14, or 9.9 percent, to close at $23.73 on the Nasdaq Stock Market.

Watson shares fell 55 cents, or 1.9 percent, to $29 on the New York Stock Exchange.

Short-term rates soar for T-bills

Interest rates on short-term Treasury bills rose in Monday's auction to the highest levels in five years.

The Treasury Department auctioned $19 billion in three-month bills at a discount rate of 4.510 percent, up from 4.500 percent last week. An additional $21 billion in six-month bills was auctioned at a discount rate of 4.645 percent, up from 4.600 percent last week.

Separately, the Federal Reserve said Monday that the average yield for one-year Treasury bills, a popular index for making changes in adjustable-rate mortgages, rose to 4.77 percent last week from 4.74 percent the previous week.

Another big deal for Capitol One

NEW YORK - In its second major banking deal, credit-card issuer Capital One Financial Corp. is buying North Fork Bancorp Inc. in a stock-and-cash transaction valued at nearly $15 billion.

The combined company will have deposits of more than $84 billion, putting it among the nation's top 10 banks by deposits, according to Monday's announcement.

While most analysts were positive about the acquisition, several expressed concern that it will complicate integration efforts at Capital One, which still is grappling with its purchase last year of Hibernia Corp., a New Orleans-based bank that was hit hard by Hurricane Katrina shortly before the takeover.

Merck bid looks low on Schering

FRANKFURT, Germany - Shares of drug maker Schering AG soared more than 25 percent Monday as markets seemed to believe another bid could exceed Merck KGaA's offer of 14.9 billion euros, or $17.7 billion, for the company.

Investors sent the company's stock up to close at 84.11 euros ($100.27), suggesting that Merck must raise its offer of 77 euros per share or face a competing bid for the maker of multiple-sclerosis treatment Betaferon and the oral contraceptive Yasmin.

Fannie Mae find still more errors

WASHINGTON - As it continues to peel through the onionlike layers of its $11 billion faulty accounting, mortgage company Fannie Mae disclosed Monday that it has found additional errors in its government-ordered review.