McKesson Will Buy Medical Supplier for $775 Million

San Francisco-based McKesson Corp. said Tuesday that it has agreed to acquire General Medical Inc., a privately held supplier of health-care supplies, in a deal valued at $775 million, including the assumption of debt.

The combined company would be the largest health-care supply management company in North America, it said.

General Medical supplies medical products to a range of alternate-site health-care facilities, including doctors and clinics, long-term care and home-care sites.

McKesson, a supplier of wholesale pharmaceuticals and related services, hopes the purchase will give it a stronger presence in the alternate-site medical market, the fastest-growing sector for drugs and medical supplies.

The company would pay $347 million--half in McKesson common stock, half in cash--for the equity of General Medical. It would also assume $428 million in debt. McKesson said it will issue 2.75 million to 3.72 million shares in the deal, depending on the price of its stock just before the deal closes.

McKesson shares rose 37.5 cents to close at $55.25 on the New York Stock Exchange.

General Medical would become a wholly owned subsidiary of McKesson, retaining its current senior management team.

“The combination of McKesson and General Medical will create a strong new force for shaping the health-care supply needs of physicians, extended-care facilities and integrated health-care networks,” McKesson Chairman Alan Seelenfreund said in a statement.

The deal is expected to close within two months, pending regulatory approvals.

Richmond, Va.-based General Medical distributes more than 130,000 products.