Generic pharmaceuticals firm Watson is to buy Actavis for €4.25 billion, in a deal that will create the third largest generics company in the world.

The move will help further Watson's global expansion, strengthening its business outside the US. Actavis, which entered the Irish market in 2008 and has a base in Cork, currently has a commercial presence in more than 40 countries worldwide. It markets more than 1,000 products and has in the region of 300 projects in its development pipeline.

In 2011, revenues at the firm, which employs more than 10,000 people globally, were about $2.5 billion.

"In a single, commercially compelling transaction, we more than double Watson's international access and strengthen our commercial position in key established European markets as well as exciting emerging growth markets, including Central and Eastern Europe and Russia," Watson chief executive Paul Bisaro said.

"The transaction achieves Watson's stated strategic objective of expanding and diversifying our business into a truly global company. Once the transaction is completed, approximately 40 per cent of our generic revenues will come from markets outside of the US."