Under the deal, Valeant will purchase all of the outstanding common stock of Salix for $158.00 per share in cash.
Based in Raleigh of North Carolina, Salix develops and markets prescription pharmaceutical products and medical devices to treat gastrointestinal diseases.
Valeant Pharmaceuticals International chairman and CEO Michael Pearson said: "Salix’s market-leading gastrointestinal franchise is an ideal strategic fit for Valeant’s diversified portfolio of specialty products.
"The growing GI market has attractive fundamentals, and Salix has a portfolio of terrific products that are outpacing the market in terms of volume growth and a promising near-term pipeline of innovative products."
Holding a significant share in gastrointestinal market, Salix produces 22 products, including prescription brands such as Xifaxan, Uceris, Relistor, and Apriso.
The company will in-licence the late-stage or marketed proprietary therapeutic products and commercialises them, through completing the development and regulatory submission of the products if required.
According to Valeant, the combination is expected to result in around $500m annual cost savings from the base of the combined company.
Salix Pharmaceuticals board chairman and acting CEO Thomas D’Alonzo said: "Combining Salix’s leading market position in gastroenterology with Valeant’s scale and resources will create a stronger and more diverse business committed to providing better health solutions to health care providers and their patients."
Subject to customary closing conditions and regulatory approval, the deal is expected to be completed in the second quarter of this year.