The Montreal-area company's offer of US$2.92 per share for all of Solta Medical Inc.'s stock is valued at US$250 million, a 40 per cent premium to Friday's closing price on the Nasdaq.
Valeant said Monday the friendly deal to buy Solta (Nasdaq:SLTM) adds to its significant presence in the "esthetics" market and will create future growth.
"Moreover, this transaction will further enhance our ability to offer dermatologists and plastic surgeons the most comprehensive esthetic product offering," Valeant chairman and chief executive officer Michael Pearson said in a news release.
Solta Medical makes radio frequency energy-based devices for skin tightening, body contouring and treating inflammatory acne, for example.
The acquisition will add to Valeant's injectable products for the face, skin care products and prescription products, giving it the "broadest esthetic portfolio in the industry," Pearson said.
Valeant, Canada's largest publicly traded drug company, has made a number of acquisitions in recent years to add to its dermatology, eye care and over-the-counter products.
Valeant merged with Canadian drug company Biovail in 2010 and has grown through mergers and acquisitions. It has moved its global headquarters to Quebec to focus on over-the-counter dermatology products.
Among Valeant's biggest acquisitions was the purchase of eye care company Bausch + Lomb for US$8.7-billion, a deal which closed earlier this year. Another major deal was its $2.6-billion purchase in 2012 of U.S.-based Medicis Pharmaceutical Corp. to strengthen its position as a global leader in dermatology products.
Solta Medical's board of directors said it supports the offer, which requires that Valeant gets at least a majority of the company's shares.
"Valeant has a proven track record of successfully integrating a number of major acquisitions into their portfolio and has established a significant presence in the esthetics market," Mark Sieczkarek, chairman and interim CEO of Solta, said in a statement.
"We like the deal," said RBC Capital Markets analyst Douglas Miehm, who noted that Solta had $145 million of revenues in 2012.
However, he also noted that Solta is in the midst of a reorganization and said Valeant's bid "may be considered opportunistic and additional interest in Solta may be possible."
But Canaccord Genuity analyst William Plovanic said he doesn't think there will be any additional bidders for Solta due to Valeant's "strong balance sheet" and previous acquisitions in esthetics with the recent purchases of Medicis and Obagi Medical.
Other potential bidders don't have enough cash on hand to fund a deal, Plovanic added.
In October, Valeant announced a US$973-million net loss for the third quarter, due to one-time impairment and restructuring charges and the settlement of a dispute with California-based Anacor Pharmaceuticals.
Shares in Valeant closed up $4.45, or nearly four per cent, at $117.52 on the Toronto Stock Exchange.