Valeant, a Canadian drugmaker, said Tuesday that it will pay $19.75 per share for Obagi's stock, a 28 percent premium over the Long Beach, Calif., company's closing price Tuesday.
Valeant has been bulking up its dermatology business. The drugmaker, which also focuses on neurology and generic drugs, bought acne and wrinkle treatment maker Medicis Pharmaceutical Corp. for $2.6 billion in December.
Long Beach, Calif.-based Obagi makes skin anesthetics as well as prescription and over-the-counter drugs used to treat fine lines, wrinkles, acne, sun damage and other skin problems. It posted sales of $120 million last year.
Valeant expects the addition of Obagi, expected to close by the end of June, to immediately boost its earnings.
Obagi's board has approved the deal and is recommending that stockholders sell their shares.
Shares of Valeant Pharmaceuticals International Inc. rose $2.64, or 3.7 percent, to $74.08 in morning trading. Obagi Medical Products Inc. stock jumped 28 percent to $19.70.