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* Valeant on buying spree over past year
* Obagi shares jump 28 pct; Valeant up 4 pct (Updates with share activity and analysts' comments)
By Esha Dey and Rod Nickel
March 20 (Reuters) - Canada's Valeant Pharmaceuticals International Inc said it would buy Obagi Medical Products Inc for about $344 million to boost its dermatology business, pushing ahead with a strategy of rapid growth through acquisitions.
The offer price of $19.75 a share represents a 28 percent premium to Obagi's Tuesday closing price on the Nasdaq.
Obagi's board has unanimously approved the deal, Valeant said in a statement on Wednesday.
Shares of Obagi jumped 28 percent to $19.69, just shy of Valeant's offer price. Valeant stock gained nearly 4 percent in early trading in New York and Toronto, to $74.28 and C$76.14, respectively.
"It makes sense and I think that's why the stock is reacting positively," said Tim Chiang, analyst at CRT Capital Group. "Their main objective is to acquire the revenues, hopefully grow the revenues and then cut costs."
Valeant, Canada's largest publicly-traded drugmaker, has been building up its dermatology and aesthetics portfolio in the United States over the past year.
It has acquired about a dozen smaller companies or assets, including the $2.6 billion purchase of U.S.-based Medicis Pharmaceuticals Corp in December that added Botox competitor Dysport and other skincare drugs to its products.
Analyst Gary Nachman of Susquehanna said in a note to clients that he spoke to Valeant management, who said that while it thinks other companies have looked at Obagi, it was not expecting a rival bid.
Valeant said it expects the transaction to close in the first half of 2013 and immediately add to its cash earnings per share.
The deal is expected to save at least $40 million in annual costs within six months of closing.
Chief Executive Michael Pearson told Reuters in February that Valeant was in talks for more acquisitions and was also open to discuss a potential "merger of equals."
The Montreal-based company has a market cap of about $21.7 billion. Obagi, which makes topical aesthetic products, had revenue of about $120 million in 2012.
"Obagi is a leader in the physician dispensed market and enjoys a strong brand perception among physicians. The addition of their products will ... expand our market presence with dermatologists and plastic surgeons," Pearson said on Wednesday.
Valeant's acquisitions have pushed its debt up 65 percent to $10.8 billion, since the end of 2011. The company aims to lower its debt level to below four times trailing EBITDA (earnings before interest, taxes, depreciation and amortization) this year from slightly over four times currently.
The Obagi purchase is small enough that it shouldn't have much effect on Valeant's efforts to cut its debt, Chiang said.
$1=$1.03 Canadian Reporting by Esha Dey, Bhaswati Mukhopadhyay and Vrinda Manocha in Bangalore and Rod Nickel in Winnipeg, Manitoba; Editing by Roshni Menon, Joyjeet Das and Nick Zieminski