Generic drug manufacturer Mylan Laboratories is buying branded drugmaker King Pharmaceuticals for about $4 billion in stock, company officials said. The combined company will have approximately $3 billion of annual revenue and 6,000 employees. Mylan, Teva Pharmaceuticals, Forest Laboratories and other generic drug manufacturers have seen their sales surge as employers try to cut soaring health care costs. But much of that growth has been driven by the expiration of patents on high-margin branded pharmaceuticals, which will slow considerably in coming years. Mylan and others are trying to smooth out that boom-bust cycle by adding more branded drugs to their portfolios.

Existing Home Sales Hit All-Time High

Existing home sales hit an all-time high in June as rising mortgage rates triggered a rush to close deals before rates went higher. The increase, which was the fifth consecutive gain, pushed the annual rate to a record 6.95 million units, the National Association of Realtors reported. June sales beat May's record of 6.81 million units. Every region of the country either set or tied its record for sales activity.

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Cardinal Health's chief financial officer resigned after regulators stepped up a probe of the company's accounting. The company is the second-biggest U.S. drug distributor. Cardinal will delay releasing financial results for fiscal 2004 and the fourth quarter.

The Securities and Exchange Commission asked a federal court for more time to update a complaint of improper mutual funds trading against Invesco Funds Group and former chief executive Raymond Cunningham. The SEC and New York Attorney General Eliot L. Spitzer said Invesco let privileged clients make trades that were detrimental to ordinary shareholders.

ImClone Systems stock fell sharply due to fears over higher-than-expected royalty payments to partners who helped the biotechnology company develop its cancer drug Erbitux. Shares closed at $56.42, down $9.62, on the Nasdaq Stock Market.

ESS Technology, a maker of microchips for DVD players, was ordered by a California judge to stop selling descrambling chips to unauthorized manufacturers whose products might be used to make illegal copies of DVDs. The Motion Picture Association of America had requested the order.

SIG Specialists and Performance Specialist Group have agreed to pay $5.2 million in fines and disgorgement for illegally trading stock, closing out an investigation that implicated all seven NYSE specialist firms. The firms put their own companies' trades ahead of those of other traders, the Securities and Exchange Commission said.

T-bill rates rose to their highest level since October 2002. The Treasury Department sold $18 billion of three-month bills at a 1.425 percent discount rate, up from 1.330 percent last week, and $16 billion of six-month bills at 1.735 percent, up from 1.650 percent last week. The rates understate the actual return to investors -- 1.449 percent for three-month bills, with a $10,000 bill selling for $9,964.00, and 1.774 percent for a six-month bill selling for $9,912.30.

INTERNATIONAL

Microsoft said it will fight a Japanese trade watchdog's warning about violating anti-monopoly law in licensing deals involving its Windows software. The Fair Trade Commission said the software giant must drop a clause in licensing agreements that it suspects helps Microsoft unlawfully infringe patents. Microsoft has dropped the clause, but the FTC wants it to be dropped from earlier contracts.

Parmalat Finanziaria, which filed for bankruptcy in December with $17 billion of debt, pledged to distribute half its future profit in dividends as part of a reorganization plan approved by the Italian government. The plan includes a debt-for-equity swap, according to the Italian Exchange.

Santander Central Hispano, Spain's biggest bank, is buying Abbey National, Britain's sixth-biggest bank and number-two mortgage lender, for about $15.6 billion in cash and stock. Santander called Abbey "an attractive platform" through which to enter the British market.

General Motors and the Canadian Auto Workers Union reached a tentative agreement in an auto parts strike that forced GM to close two assembly plants, idling 6,000 workers. More than 500 workers walked off the job after contract talks broke down at TDS Automotive in Ontario. A union spokesman said members were to vote on the deal yesterday and be back on the job for the overnight shift if it was approved.

RECALLS

General Motors faces a U.S. safety investigation and potential recall of 227,303 Saturn Vue sport-utility vehicles because the rear suspension collapsed during federal rollover tests. The preliminary evaluation covers 2002 through 2004 models, the National Highway Traffic Safety Administration said on its Web site.

Toyota is recalling 128,316 Camry sedans from model years 2002-2004 because the side air bags may not inflate properly. The automaker said improper assembly caused some bags to become twisted, so not enough gas will be released to inflate the air bag in a crash.

EARNINGS

BellSouth reported a 5 percent gain in second-quarter profit on flat revenue as it continued to lose access lines but benefited from growth in its long-distance and high-speed Internet services. The telecommunications giant said it earned $996 million, compared with $951 million a year ago.

Kellogg, the world's leading cereal producer, reported a 16 percent increase in net earnings for the second quarter, crediting the successful execution of its business strategy and continued sales growth. Profit increased to $237.4 million, compared with $203.9 million a year ago.

Humana posted second-quarter net income of $80.8 million, up from $69.3 million a year ago, buoyed by robust government business. The Louisville managed care company said it was on track to achieve record earnings.

HCA's second-quarter earnings jumped 46.7 percent to $352 million as more states adopted tort reforms and the hospital giant's malpractice insurance costs dropped. Revenue for the three months ended June 30 rose 6.6 percent to $5.83 billion.

Tyson Foods said third-quarter profits more than doubled, though fear of mad cow disease hurt beef sales and avian influenza hit overseas chicken sales. Tyson reported earnings of $161 million, compared with $79 million a year earlier.

American Express increased second-quarter earnings by 15 percent, to $876 million, from $762 million a year ago as an expanding economy prompted more travel. Revenue rose 14 percent to $7.26 billion.

Fiat reported a net loss of $562 million for the second quarter, but the Italian automaker's chief executive said the company would reverse that trend in 2006. Fiat blamed poor performance by its core auto business on a prolonged strike at the southern plant of Melfi.

Boston Scientific reported that its second-quarter profit nearly tripled to $313 million, from $114 million a year ago boosted by strong sales of the medical device maker's recently approved drug-coated heart stent and favorable currency exchange rates.

Compiled from reports by the Associated Press, Bloomberg News, Dow Jones News Service and Washington Post staff writers.

Pilgrim's Pride, a supplier for KFC, fired 11 workers after People for the Ethical Treatment of Animals released a video of employees kicking, stomping and throwing birds against walls at the plant. The company said third-quarter profit fell 44 percent to $9.8 million, compared with $17.4 million a year ago. Sales more than doubled to $1.4 billion after the acquisition of ConAgra Foods' chicken division.