U.S.-listed shares of Valeant soared as much as 36 percent after the news, but ended the day slightly below their intraday high. The stock ended the day up more than 33 percent, closing at $23.86 a share.
The Wall Street Journal first reported the news.
Valeant said in a statement that it is currently discussing "various divestitures including but not limited to Salix" with third parties. The company said it does not intend to "comment further on market speculation or disclose any developments unless and until it otherwise deems further disclosure is appropriate or required."
A source told CNBC that the $10 billion deal could include $8.5 billion in cash plus future royalty payments for Valeant. The agreement could come within weeks, but the source said there is no guarantee as there is another suitor for the unit, Salix Pharmaceuticals.
Salix focuses on licensing and developing drugs for gastrointestinal disorders. Valeant acquired the company in 2015.
By selling Salix, Valeant could put a dent in its cumbersome debt load. The company's new CEO said in June that paying off some of the company's debt was part of his vision for rebuilding the company.
"If we can sell some of those non-core assets to pay off the debts, it will allow us to pay down our additional debt," he told shareholders.
— CNBC's Scott Wapner contributed to this report.