Valeant Pharmaceuticals International said today it plans to acquire Obagi Medical Products in an approximately $360 million deal that would strengthen the buyer’s portfolio of dermatology treatments with the acquired company’s specialty focus on prescription-strength skin care drugs.

Montreal-based Valeant, Canada’s largest publicly traded drug developer, focuses in the U.S. on prescription dermatology as well as consumer products, podiatry, oral health, neurology, and other therapeutic areas. Valeant markets treatments for disorders that include actinic keratoses, acne, psoriasis and the appearance of scars, skin-aging, and apparent pigmentation.

Obagi, which is headquartered in Long Beach, CA, and also publicly traded, markets products that include the Nu-Derm® System, an anti-aging portfolio designed to prevent telltale signs such as age spots, wrinkles, and rough skin from appearing in cells; the newest product Hydrate™ promises eight hours of facial moisture protection. Obagi’s Professional C-Serums™ are made from vitamin C and designed to deliver maximum antioxidant protection, while Obagi-C® Rx, a prescription-strength vitamin C and hydroquinone system, is designed to improve the skin’s appearance following hyperpigmentation.

In a statement, Valeant predicted that the acquisition will provide opportunities for about $40 million in annual cost savings within six months of closing. Valeant and Obagi expect the deal to be completed during the first half of the year, subject to conditions that include the tender of a majority of Obagi’s outstanding common-stock shares, and the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.

Upon completion, a wholly owned subsidiary of Valeant will merge with Obagi, and the outstanding Obagi shares not tendered in the tender offer will be converted into the right to receive the same $19.75 per share cash paid in the tender offer.

At $19.75 per share, the price represents a 42% premium to Obagi’s closing share price on NASDAQ on March 14, the last trading day prior to its disclosure of fourth quarter and full year 2012 earnings, a 40% premium to the 30-day prior stock price, and a 28% premium to its closing price yesterday.

“Obagi is a leader in the physician dispensed market and enjoys a strong brand perception among physicians. The addition of their products will not only strengthen and diversify our dispensed portfolio, but also expand our market presence with dermatologists and plastic surgeons,” Valeant chairman and CEO Michael Pearson said in a statement.

He added: “The acquisition of Obagi will be a valuable supplement to Valeant’s current dermatology portfolio and will further build upon our growing aesthetics franchise.”

In its final pre-announcement financial results, released March 14, Obagi said it finished the fourth quarter with $7.3 million in net income, up from $5.1 million in Q4 2011, on net sales of $30.3 million, a slight dip from the year-earlier $30.6 million. For all of 2012, Obagi racked up $16.6 million in net income, up from an even $10 million in 2011, as net sales rose 5.8% to $120.7 million in 2012 from $114.1 million a year earlier.

Valeant finished Q4 2012 with an $89.1 million net loss compared with net income of $55.9 million in the final three months of 2011, despite a 43% revenue jump to $986.3 million. For all of last year, Valeant lost $116 million on $3.3 billion in revenue, compared with nearly $160 million in net income on $2.3 billion in revenues in 2011.

While Valeant blamed its losses in part on generic competition and currency fluctuations, Obagi is Valeant’s latest acquisition in a series that includes more than a dozen last year, the largest of which was the approximately $2.6 billion purchase of another skin-care product maker, Medicis Pharmaceutical, completed December 11, 2012.

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