The acquisition, announced on Monday, positions >Actavis as one of the five largest generic pharmaceutical companies in the world.
Actavis muscled into the US generics market in May when it agreed to pay more than $500 million in cash for privately held US generics company Amide Pharmaceutical.
Last month Actavis also acquired the generic business of Hungarian drug maker Keri Pharma and Bulgarian pharmaceutical distributors Higia AD.
The deal follows a consolidation trend within the generic-drugs sector this year - Teva is buying Ivax, Novartis took over Eon Labs, and Able Labs is out of business.
In getting out of the generics business, >Alpharma is shedding the largest division of its company, accounting for more than half its revenue in the first six months of this year.
The move is designed to allow the company to focus on improving its ability to invest in growth opportunities within its remaining higher-margin branded pharmaceutical operations.
The sale will also enable Alpharma to repay its outstanding debt by mid-2006, with net after-tax cash proceeds expected to be $150-200 million following the debt repayment.
In anticipation of the transaction, Alpharma has temporarily suspended its search for a chief executive to succeed Ingrid Wiik, who announced her imminent retirement earlier this year pending the appointment of a successor.
The deal, which has already been approved by the boards of both companies, is expected to close in the fourth quarter.
Alpharma's global generics business, including its distribution unit ParMed Pharmaceuticals, whose results have historically been included with the US generics segment, reported sales of $843 million last year out of a total of $1.3 billion.
Alpharma will retain its branded pharmaceuticals, active pharmaceutical ingredients and animal health businesses, as well as ParMed Pharmaceuticals.
For the six months ended June 30, the retained businesses generated 41 per cent of Alpharma's total revenue and 64 per cent of its operating income before taxes and expenses.
The company expects 2006 earnings before interest, depreciation, and amortisation for its retained businesses to be about $135 million and predicts annual cost reductions of at least $15 million.
The announcement on Monday saw Alpharma shares rise more than 4 per cent.
Based in New Jersey, US, Alpharma is a multinational pharmaceutical company with global leadership positions in products for humans and animals.
Founded in 1956, Actavis manufactures and sells generic pharmaceuticals, operating across five continents, with its headquarters in Iceland.