Valeant Pharmaceuticals International Inc. is buying dermatology products maker Medicis Pharmaceutical Corp. in a $2.6-billion cash deal aimed at strengthening its position in the skin treatments market.

Montreal-based Valeant has agreed to pay $44 per share for Medicis, a 39 per cent premium over Friday's closing price of $31.87 for the Scottsdale, Ariz., target company.

"We have a great deal of respect for Medicis and, given the complementary nature of our portfolios and our aspirations in dermatology, we have been looking a Medicis for some time," Valeant CEO Michael Pearson told analysts during a conference call Tuesday.

Valeant includes former Biovail

Pearson said Valeant has had discussions with Medicis three times over the past year, making its most recent approach on Aug. 24.

"We are very pleased that we were able to agree to the terms of this transaction over the last couple of weeks," he said.

"We're excited about this deal and the opportunity it brings to strengthen our position in the large and growing U.S. dermatology and esthetics market."

The boards of both companies have approved the deal but the takeover needs the approval of Medicis shareholders as well as regulatory clearance. The companies hope to complete the transaction in early 2013.

Valeant chairman and CEO Michael Pearson said the deal would be "a significant next step" toward making his company the leader in dermatology by expanding its products to treat acne as well as providing injectable esthetic products.

The combined company's commercial dermatology operations would be based in Scottsdale, and will operate under the Medicis name, the companies said. Its research and development operations would operate in Canada, Arizona and California. Corporate support functions would be based mostly in New Jersey.

The chairman and CEO of Medicis, Jonah Shacknai, called the offer compelling and said the combined portfolio of products under the Medicis name would be enable the combined company to capitalize on opportunities in the markets for dermatology and esthetic treatment products.

Medicis' prescription brands include Solodyn, Perlane, Ziana and Dysport.

Valeant said it expects the deal to be immediately accretive to earnings and begin producing annual cost savings of "at least" $225 million within six months of closing.

Valeant, Canada's largest publicly traded drug company formed from the combination of California-based Valeant and the former Biovail, reported a $21.6-million net loss in the second quarter, largely as a result of restructuring and acquisition charges.

Many acquisitions

The results also included a $53.6-million charge related to the settlement of a class-action anti-trust complaint.

Valeant has now made more than a dozen acquisitions this year, including iNova, which sells and distributes a range of prescription and over-the-counter products in Australia, New Zealand, Southeast Asia and South Africa.

It also acquired Dermik, a dermatological unit of Sanofi in the U.S. and Canada that manufactures, markets and sells a range of therapeutic and aesthetic dermatology products.

Last year, it bought Edmonton-based Afex Life Sciences, maker of the over-the-counter cold and flu remedy Cold-FX.

In April, Valeant announced it would move its global headquarters to Quebec to focus on over-the-counter dermatology products. It's also setting up a research and development centre for consumer dermatology in Laval, which is north of Montreal.

Valeant Pharmaceuticals International, Inc. is a multinational specialty pharmaceutical company that develops, manufactures and markets a broad range of products primarily in the areas of neurology, dermatology and branded generics