By David Stires

(FORTUNE Magazine) – What we said

In "Ready to Get Swallowed" (July 21, 2003) we argued that a new merger boom was on the horizon thanks mainly to the combination of a rallying stock market and low interest rates, which would make it easier to arrange financing for deals. We picked three stocks that seemed to be attractive takeover candidates.

What happened

Merger mania returned--and one of our picks got gobbled up. On July 25, generic-drug giant Teva Pharmaceuticals said it planned to buy U.S. rival Ivax (IVX, $26) for $7.4 billion, a deal that would create the world's largest maker of knockoff drugs. Ivax shares rose 10% on the announcement; the stock has gained 44% since our story ran. The deal, which needs shareholder and regulatory approval, is expected to close late this year or early next. We also recommended California Water Service Group (CWT, $41), a large water utility, and Anadarko Petroleum (APC, $89), one of the world's biggest oil and gas companies. Though neither has been acquired, the shares of both companies have risen sharply. California Water has gained 46%, thanks to rate increases and a growing customer base. Anadarko has jumped 102% on surging oil prices. -- David Stires