TORONTO (AP) — Valeant Pharmaceuticals International Inc. has agreed to buy dermatology products maker Medicis Pharmaceutical Corp. for about $2.6 billion in cash in a deal to strengthen its position in skin treatments and care.

Montreal-based Valeant, Canada's largest publicly-traded pharmaceuticals company, said Monday that it has agreed to pay $44 per share for Medicis, a 39 percent premium over Friday's closing price of $31.87 for the Scottsdale, Ariz., target company.

The boards of both companies have approved the deal. It needs approval by Medicis shareholders and regulatory clearance. The companies hope to complete the deal in early 2013.

Valeant Chairman and CEO J. 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 injectable aesthetic products often used to smooth out wrinkles and make people look younger.

Pearson has made 50 about acquisitions since taking over as CEO in 2008, including 15 this year. He said it's their largest deal since Valeant combined with former competitor Biovail Corp. in late 2010.

Pearson said he would rather do acquisitions than spend on research and development which he calls a highly risky use of shareholder cash. He said the pharmaceutical industry's productivity hasn't been very good over the last decade.

"The attraction of this one is that this is squarely in the middle of dermatology where we already have a business. Their products are highly complementary to ours," Pearson said. "It really fills in some holes that we had in our portfolio."

He noted that they had no oral acne product and said Medicis has a great sales force.

"It will allow our sales reps to have a full line of products," he said.

A Valeant spokeswoman said after the transaction its global dermatology sales will represent approximately 50 percent of the company.

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 able to capitalize on opportunities in the markets for dermatology and aesthetic treatment.

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

Valeant expects the deal will produce cost savings at an annual rate of $225 million within six months of closing.

The deal comes after Valeant failed in its bid last year to acquire Cephalon after Teva Pharmaceutical Industries Ltd. trumped Valeant's bid with a $6.8 billion for the company.