Morales, 29, hit 22 home runs in 522 plate appearances last year for the Angels. He did not play in 2011 after injuring himself celebrating a walk-off home run, but rebounded nicely. The Angels had a surplus of first basemen after signing Albert Pujols (and having Mark Trumbo).
Vargas, 29, threw 217.1 innings last season while posting an ERA of 3.85. He was acquired by the Mariners in a three-team trade that sent J.J. Putz to the New York Mets during the 2009-10 offseason.
The Angels have been actively pursuing pitching this offseason, already acquiring Tommy Hanson from the Braves, and signing Joe Blanton. The team has to fill spots left by Zack Greinke, Dan Haren, and Ervin Santana.
The Mariners have been pursuing hitters, actively going after both Josh Hamilton and Nick Swisher. The team has been looking to upgrade on first baseman Justin Smoak, who has disappointed since being the centerpiece of the Cliff Lee trade in 2010.
The Angels 2013 rotation is now complete, with Hanson, Blanton, and Vargas joining with Jered Weaver and last year's big addition C.J. Wilson.