US drug maker Watson Pharmaceuticals said Wednesday it will buy Iceland-based Actavis for 4.25 billion euros ($5.62 billion), creating the world\'s third-largest generic drugs company. Watson, maker of a generic version of Lipitor, Pfizer\'s blockbuster anti-cholesterol drug, said the acquisition of the privately held Actavis would greatly expand its global footprint. \"The acquisition of Actavis will create the third-largest global generics company, substantially completing Watson\'s expansion as a leading global generics company,\" Paul Bisaro, Watson president and chief executive, said in a statement. The statement was released after the stock market closed. The Actavis merger was expected to generate revenue of about $8 billion this year, according to the New Jersey-based Watson. Watson said that Actavis, as a stand-alone company, was positioned for strong growth, with a commercial presence in more than 40 countries. The Icelandic firm has more than 1,000 products globally and roughly 300 projects in its development pipeline. Actavis has more than 10,000 employees worldwide and had 2011 revenues of approximately $2.5 billion, the statement said. \"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,\" Bisaro said. Upon completion of the transaction, about 40 percent of Watson\'s generic revenues will come from markets outside the US, he said. Under the terms of the agreement, Watson will acquire Actavis for an upfront payment of 4.25 billion euros, with an additional payment to Actavis shareholders contingent on Actavis hitting certain 2012 performance targets. The contingent payment, in shares of Watson stock, was valued at 250 million euros ($330.4 million). The transaction is expected to close in the 2012 fourth quarter, subject to regulatory approvals. Watson Pharmaceutical shares were up 3.8 percent to $73.50 in after-hours trading.