WASHINGTON--The Federal Trade Commission on Monday cleared Watson Pharmaceuticals Inc.'s (WPI) proposed $5.9 billion acquisition of Swiss rival Actavis, but required the companies to sell the rights and assets to 18 drugs as a condition of government approval.

Under a settlement with the FTC, the companies will sell those assets to Sandoz International GmbH and Par Pharmaceutical Inc., the agency said.

The FTC also said Watson and Actavis will relinquish manufacturing and marketing rights to three other drugs.

The agency said the settlement would protect competition in the markets for current and future generic drugs used to treat a wide range of conditions, from diabetes to anxiety and attention deficit hyperactivity disorder.

Write to Brent Kendall at brent.kendall@dowjones.com

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