Watson Pharmaceuticals Merges With N.Y. Firm : Health: The Corona-based company joins with Circa Pharmaceuticals to form one of the nation’s largest makers of generic drugs.

Shareholders of Watson Pharmaceuticals Inc. and Circa Pharmaceuticals Inc. approved the merger of the two companies Monday, creating one of the nation’s largest makers of generic drugs.

Circa of Copiaque, N.Y., will operate as a subsidiary of Corona-based Watson. Allen Chao, Watson’s chief executive officer and president, retains the CEO spot in the combined company. Circa’s Chief Executive Melvin Sharoky, M.D., was elected Watson’s new president.

In a stock-pooling deal valued at nearly $700 million, Circa shareholders received 0.86 of a common share in Watson for each Circa share. Circa shares ceased trading Monday on the American Stock Exchange, closing at $31.87 1/2 a share, up 62.5 cents. Shares of Watson closed at $37.25, up 75 cents.

The deal brings relief to Circa shareholders, who endured a financial scandal in the 1980s that devastated their company. Circa, formerly known as Bolar Pharmaceuticals, paid more than $80 million to settle criminal and civil lawsuits stemming from a U.S. Food and Drug Administration investigation into company bribes of FDA officials and doctored drug samples.

Several company employees pleaded guilty in the case and were sentenced to prison. None of those involved are still with the company, said Michel Feldman, a Watson director.

Watson’s sales volume last year of $87 million dwarfed Circa’s $7.8 million. But their earnings were fairly close: $18.7 million, or $1.05 a share, for Watson, versus $17.3 million, or 79 cents a share, for Circa.

Circa’s earnings actually exceeded its revenue, because it receives much of its income through royalties on a drug used to treat hypertension and angina. In addition, it gets sizable dividends from its 50%-owned subsidiary, Somerset Pharmaceuticals Inc. in Tampa, Fla., which makes a treatment for Parkinson’s disease.