NEW YORK (AP) -- Israeli drugmaker Teva Pharmaceutical said Friday it will buy rival generic drug company Barr Pharmaceuticals for more than $7 billion in a move to expand its presence in U.S. and Eastern European markets.

Teva Pharmaceutical Industries Ltd. also is offering to assume $1.5 billion of Montvale, N.J.-based Barr Pharmaceuticals Inc.'s debt.

Barr shareholders will receive $39.90 in cash and 0.6272 of a Teva American Depositary Receipt for each share they own, or a total purchase price of $66.50 per share. That represents a 16 percent premium to Barr's $57.17 closing price Thursday.

Barr shares finished at $46.82 Wednesday, before reports that a deal was in the works sent the stock climbing 22 percent.

Already the largest generic drug maker in the world, Teva reported $9.4 billion in sales in 2007. Barr posted $2.5 billion in revenue, and the company describes itself as the largest maker of oral contraceptives in the U.S. It began selling a generic version of Bayer AG's birth-control pill Yasmin in the U.S. in July.

Barr also has the rights to sell a generic version of the attention deficit hyperactivity disorder drug Adderall XR starting April 1, 2009.

The deal will give Teva a larger presence in Central and Eastern Europe, where Barr already has a footprint because of its 2006 purchase of Pliva, a Croatian drug maker.

Based on Barr's 108.1 million shares outstanding at April 28, the deal is valued at $7.19 billion before assumed debt. In a statement, the companies valued the deal at $7.46 billion before debt.

Barr stock jumped $3.82, or 6.7 percent, to $60.99 in premarket trading, which put the shares on pace for their highest opening in more than two years. Teva's ADRs gave up $1.50, or 3.7 percent, to $39.55, which would be an annual low for the stock.