UPDATE 3-McKesson to expand in Canada with Rexall Health buy
* Deal funded by mix of cash & debt
* Transaction to add to McKesson's fiscal 2017 profit (Adds analyst comment, shares)
By Natalie Grover
March 2 (Reuters) - U.S. drug distributor McKesson Corp said it would buy drugstore chain Rexall Health from Katz Group for C$3 billion ($2.23 billion) to strengthen its position in Canada's pharmaceutical supply chain.
The deal will give McKesson access to about 470 retail pharmacies, and help leverage its existing assets in the country, particularly in Ontario and Western Canada, the companies said.
This is the second acquisition announced by San Francisco-based McKesson in recent weeks. Late last month, it announced its plan to buy two privately held cancer care service providers for about $1.2 billion, to add muscle to its specialty health business.
The more than 150-year old McKesson, which also distributes drugs to CVS Health Corp, in January said its fiscal 2017 earnings would likely be hit by weak generic drug pricing and narrowed its profit forecast for 2016.
McKesson's lucrative supply deal with Rite Aid Corp hangs in the balance after the drugstore chain Rite Aid agreed in October to be bought by Walgreens Boots Alliance Inc.
Walgreens sources its drugs from rival distributor AmerisourceBergen Corp. Continued...