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Teva's (TEVA.TA) (TEVA.O) $81.50-a-share deal is a nearly 12 percent premium over Valeant's (VRX.TO) $73-a-share offer, which Valeant made public on March 29.

Israel-based Teva is best known as the world's largest maker of generic drugs, but it also has a significant business selling brand medicines that have patent protection. Adding Cephalon's pain, sleep and cancer drugs will help Teva reduce its dependence on its big-selling Copaxone multiple sclerosis medicine, which faces increasing competitive threats.

The acquisition "down the road will reduce the impact of Copaxone on Teva," said Natali Gotlieb, an analyst at the IBI Investment House. "Cephalon has a very interesting pipeline and the price seems fair."

The deal is not conditioned on financing and is expected to be completed in the third quarter, the companies said. Teva expects the deal to immediately add to its non-GAAP earnings per share.

The transaction is worth $6.8 billion, including the conversion of Cephalon's convertible debentures and stock options.

Cephalon had urged shareholders to rebuff Valeant's overtures, and Cephalon shares had been trading above the Canadian company's offer.

Cephalon shares rose 5.8 percent to $81.52 in premarket trading. Teva shares rose 3 percent after the announcement.

Cephalon Chief Executive Officer Kevin Buchi said the deal with Teva followed a review of a wide range of strategic options.

"There's always the possibility someone else could come in, but I think the likelihood of Valeant offering a higher bid is low, judging from the language they've used in the past," said Jon LeCroy, an analyst at Hapoalim Securities. "I don't see them coming back. Right now it looks like the Teva bid will stick."

Teva has steadily built its business through acquisitions, including significant deals for generic drugmakers Barr Pharmaceuticals and Ratiopharm.

"They (Teva) paid too much when they bought Ratiopharm and I think they might be paying too much now but it makes sense to diversify away from the generic business," said Gilad Alper, an analyst at the Meitav brokerage. "The profitability level is similar to Teva's, which is good."

Credit Suisse Securities LLC is serving as Teva's financial adviser, while Deutsche Bank Securities and BofA Merrill Lynch are advising Cephalon.

(Reporting by Lewis Krauskopf; additional reporting by Tova Cohen in Tel Aviv and Toni Clarke in Boston, Editing by Lisa Von Ahn, John Wallace, editing by Dave Zimmerman)

Chrysler also gave further details on its refinancing of $7.5 billion of loans owed to the United States and Canada stemming from its 2009 bailout.

Its first-quarter net income came to $116 million, compared with a net loss of $197 million a year earlier.

Revenue shot up 35 percent to $13.1 billion, spurred by the company's 16 new and revamped models, including the Jeep Grand Cherokee and the Chrysler 300. The company also started selling the Fiat 500 small car during the quarter.

The company reported an operating profit of $477 million in the first quarter, compared with $143 million a year earlier.

Chrysler also reiterated its full-year outlook, saying it aimed to post revenues of $55 billion and net income between $200 million and $500 million.

Sergio Marchionne, the chief executive of Chrysler and Fiat, has said the company would need to post "a couple" quarters of net income before an initial public offering, which could come this year or next.

Until now, Chrysler has posted a string of operating profits, but high interest rates on loans the company owes to the United States and Canada undercut its ability to post net income.

The company also said Monday that it would borrow $3.5 billion in a senior secured six-year term loan and $2.5 billion in secured bonds that will have eight- and 10-year maturities.

Chrysler plans to use the term loan, bonds and $1.27 billion in cash from Fiat to refinance its government loans during the second quarter.

The company also confirmed plans to secure a $1.5 billion five-year revolving credit facility, as sources previously told Reuters.

In the past two years, the company overhauled its vehicle lineup and recently spurred renewed buzz for its flagship brand with a Super Bowl ad, bearing the tagline "Imported from Detroit."

A refinancing deal would bolster Chrysler's balance sheet, making it more attractive in an IPO. The deal also paves the way for Fiat to take majority control of the U.S. automaker.

Fiat currently has a 30 percent stake. Marchionne has said Fiat plans to exercise an option to buy a 16 percent stake in Chrysler for $1.27 billion during the second quarter, which will be used to refinance Chrysler's government debt.

Fiat expects to push its stake in Chrysler to 51 percent later this year, when Chrysler is expected to meet its last performance test set by the U.S. Treasury in 2009.

(Reporting by Deepa Seetharaman; Editing by Derek Caney, Dave Zimmerman)

By 0749 GMT, futures for the S&P 500, Dow Jones futures and Nasdaq futures were up 0.7 to 0.8 percent.

U.S. Treasury yields and the dollar rose, while safe-haven gold slipped from record highs, reflecting a perception of easing geopolitical risks after U.S. President Barack Obama said late on Sunday that bin Laden had been killed in a shootout in a compound in Abbotabad north of Islamabad.

Economic data scheduled for release is seen providing further direction for equities, with the Institute of Management Supply (ISM)'s manufacturing PMI numbers for April, due out at 1400 GMT, expected to drop to 59.9 from 61.2 a month earlier.

Stocks on Wall Street rose on Friday, with the Dow .DJI and the Nasdaq .IXIC recording their best monthly performance since December on the back of upbeat corporate results.

In company news, final buyout bids for Warner Music Group (WMG.N) are due on Monday and the company could be sold by the end of the week in a deal valued at over $3 billion, according to a person familiar with the matter.

Warren Buffett still believes his reputation is intact after his former top lieutenant David Sokol pitched for a takeover of Lubrizol Corp (LZ.N) after Sokol had purchased shares in the chemicals company.

Danish food ingredients and enzymes maker Danisco's (DCO.CO) board of directors unanimously recommended that Danisco shareholders accept U.S. chemicals group DuPont's (DD.N) improved offer for Danisco.

French retail and luxury giant PPR (PRTP.PA) said it would buy California-based Volcom Inc (VLCM.O), which specializes in youth-oriented sports clothes, for $607.5 million in cash.

U.S. agribusiness and trading conglomerate Cargill CARG.UL won EU regulatory approval on Monday to purchase a German chocolate maker to expand its cocoa and chocolate business in Europe.

In Europe, the pan-European FTSEurofirst 300 .FTEU3 index rose in early trade, though volumes were expected to be thin throughout the session as Britain's markets were closed for a holiday.

(Reporting by Harpreet Bhal; Editing by Lincoln Feast)

"Everything I do is out there for the people to judge," Buffett said during his company's annual shareholder meeting on Sunday.

"I don't hold myself to a standard of perfection or I'd have committed suicide a long time ago."

He said that with 260,000 people working for his company, Berkshire Hathaway Inc, something is going to go wrong.

Buffett, who is called the "Oracle of Omaha" and one of the world's richest men, attracts about 40,000 people a year to the city for the annual meeting of his ice-cream-to-insurance conglomerate Berkshire Hathaway Inc (BRKa.N) (BRKb.N).

This weekend he was under the microscope, facing global media as well as shareholders, regarding the Sokol incident.

And yet, Buffett's feelings toward Sokol are neither protective, nor violent.

"I know what's happened and perhaps investigative authorities will develop it more fully over time," he said.

Berkshire Hathaway is not looking into any other trades by Sokol aside from Lubrizol, Buffett said.

"I know nothing in terms of his trading activities or anything of the sort," Buffett said.

Buffett also addressed the possibility of his successor and said "it would be almost impossible" to consider a CEO from outside Berkshire.

The next chief executive does not need to be a showman or attract large crowds to an annual meeting, Buffett said.

In more than five hours of questioning from shareholders on Saturday, Buffett gave his most public comments yet on the resignation of Sokol, his one-time presumed successor who resigned in March amid a growing scandal over stock trading.

Buffett called Sokol's behavior -- allegedly misleading Berkshire about the nature of a $10 million investment in Lubrizol Corp before suggesting Buffett buy the company -- "inexplicable and inexcusable."

Sokol's lawyer slammed Buffett in a statement for making his client a scapegoat.

Buffett also addressed a share buyback program and said it would be self-defeating to buy back shares. He said he would buy back stock if Berkshire were well below the bottom range of intrinsic value.

(Reporting by Ben Berkowitz in Omaha, writing by Jennifer Saba in New York; Editing by Bernard Orr)

Tens of thousands of Berkshire Hathaway shareholders who descended on Omaha this weekend for the conglomerate's annual meeting got one unmistakable message from Buffett -- no matter how bad the economy, or the deficit, or the political divide, the United States is as good a place to live and work as ever.

"I don't see how anybody can be other than enthused about this country," Buffett told Berkshire shareholders on Saturday.

Buffett, often called the "Oracle of Omaha," is one of the world's richest men and leads a conglomerate that owns railroads, insurers and ice cream parlors.

The comments echo those Buffett made in February in his annual shareholder letter, but the words still may encourage investors looking sideways at the country, particularly after Standard & Poor's put the U.S. government's critical "AAA" credit rating on a negative credit watch.

Buffett told Reuters Insider that S&P's move was premature, given the U.S. government issues debt only in dollars and can simply print more money to pay debt if absolutely needed.

"The United States is not going to default on any obligation," Buffett told Insider in an interview after the annual meeting. "We are not a credit risk, believe me."

Where Buffett's enthusiasm wanes to any degree, it is mostly in conversation on the dollar, which he said is sure to weaken over time, like most other currencies.

Buffett, as usual, said he was shying away from fixed-income investments for Berkshire's part, even as he keeps some of his personal wealth in Treasuries for safety's sake.

Some worry that safety could be threatened by the debate over the national debt ceiling, an issue that has divided Congress in recent weeks and gotten more tense as the country gets closer to its legal limit on debt issuance.

Buffett, asked about the possibility Congress would not raise the ceiling, made one of his most-repeated comments of the whole weekend, saying it would be the legislature's "most asinine act" in its history.

Buffett also affirmed his support for the banking sector, where he has big bets on Wells Fargo and U.S. Bancorp, calling the odds of another banking crisis "very very low."

His partner, Vice Chairman Charlie Munger, was less sanguine about Europe and the effects of the sovereign debt crisis, saying the continent has "a hell of a problem" in comparison.

(Reporting by Ben Berkowitz, editing by Maureen Bavdek, Bernard Orr)