TRENTON, N.J. -- Teva Pharmaceutical said yesterday that it would buy rival generic drugmaker Barr Pharmaceuticals for nearly $7.5 billion, a move that would boost Teva's dominance as the world's biggest generic drugmaker.

The deal continues consolidation of the generic-drug sector, driven by growth prospects as governments and other payers turn to the lower-priced medications and by the impending expiration of brand-name drug patents worth billions of dollars a year.

Barr Laboratories, a subsidiary of New Jersey-based Barr Pharmaceuticals Inc., is the largest private employer in Bedford County, with about 570 employees at its Forest site.

The company operates a 407,000-square-foot packaging, warehousing and distribution site and a 20,000-square-foot adenovirus plant in Forest.

Israel-based Teva Pharmaceutical Industries Ltd. said acquiring Barr Pharmaceuticals, the world's No. 4 generic drug maker, will also expand its presence in U.S. and other key markets, from Russia to Eastern and Central Europe.

Barr Laboratories' Vice President Bill Leach said at the Virginia site yesterday that the company will continue with $6 million of the expansion plans it announced in January. That effort is targeted for completion in 2009.

Barr officials said no decision has been made about whether to continue with expansion plans at the Bedford site, which was said in January would total $62 million. The transaction's effect on jobs in Forest was unclear, but Barr officials said business will continue as usual until the transaction is closed. The target date for that approval is late this year.

Analysts called the deal a great combination for both companies, and Barr shares jumped by double digits on the news.

Barr shot up $6.26, or 11 percent, to $63.43. Teva rose $1.82, or 4.4 percent, to $42.87.

"This was the 12th attempt to acquire Barr and the third by Teva," Barr chief executive Bruce Downey told analysts during a conference call. "This is the right price, the right time and the right opportunity."

Teva said the deal should bring $300 million in annual savings within three years and add to profit within a year.

Last year, Teva reported $9.4 billion in sales, while Barr posted $2.5 billion. Teva also is offering to assume $1.5 billion of Barr's debt.

The largest maker of oral contraceptives in the U.S., Barr sells generic versions of popular contraceptives. It also sells 27 brand-name drugs.

Teva, considered the largest company based in Israel, sells a new, brand-name multiple sclerosis drug, Copaxone, and is developing experimental drugs for other neurological diseases, cancer and immune and inflammatory disorders.

Together, the two companies have more than 500 products on the market and more than 200 applications pending in the U.S. to sell generic versions of brand-name drugs with $120 billion in annual sales. The combined company will have about 37,000 employees in more than 60 countries.

The Associated Press and The Lynchburg News & Advance contributed to this report.