Watson Pharmaceuticals is on track to announce a deal to buy Actavis for around $6 billion by the end of April, creating one of the world's biggest producers of generic drugs, sources familiar with the matter said on Wednesday.

While negotiations are complex, there are no major hurdles in sight that would stop the two sides from reaching agreement, two people briefed on the situation said.

Reuters first reported on March 21 that Watson was close to buying Actavis, an unlisted Swiss-based firm, in a potential €5.0-5.5 billion ($6.5-7.2 billion) deal. Since then some sources have said the price may be nearer €4.5 billion.

The prospect of such a deal has been welcomed by Watson investors, who believe it would help the U.S. group to compete more effectively against rivals like Teva Pharmaceutical Industries and Novartis unit Sandoz.

The deal would also get Deutsche Bank out of a hole, since the German bank was left holding billions of euros of Actavis debt after a leveraged buyout in 2007 by Icelandic tycoon Bjorgolfur Thor Bjorgolfsson.

Watson, Actavis and Deutsche Bank have all declined to comment on the talks.

The generics sector has seen a wave of M&A in recent years because Western governments are putting pressure on the industry to provide drugs at the lowest possible price, which favours large players who can produce at low costs.

Targeting Actavis is a bold move for Watson, whose previous acquisitions include the $1.75 billion purchase of Arrow Group in 2009, which established a foothold for the company in Europe, and the $1.9 billion purchase of Andrx in 2006.

The purchase of Actavis would be far larger but could be made to work since there would be scope for significant synergies, including the possible closure of some manufacturing capacity in the United States.