Cardinal Health Inc. plans to buy regional pharmaceutical distributor Kinray Inc. in a $1.3 billion cash deal.

The acquisition of Kinray, which mainly serves the New York metropolitan area, stands to increase Cardinal's independent retail pharmacy client base by 40%. "Adding Kinray to the Cardinal Health Pharmaceutical Segment portfolio will enable us to build on our increasing presence in community pharmacy," stated Cardinal CEO George Barrett.

DUBLIN, Ohio — Cardinal Health Inc. plans to buy regional pharmaceutical distributor Kinray Inc. in a $1.3 billion deal.

Cardinal said Thursday that the all-cash transaction to acquire Kinray, which mainly serves the New York metropolitan area, will increase its independent retail pharmacy client base by 40% to about 7,000 total customers.

With annual sales of more than $3.5 billion, Kinray is the world’s largest privately held distributor of branded and generic pharmaceuticals, health and beauty aids, and home health care products and serves over 2,000 independent pharmacies. Its headquarters is in Whitestone, N.Y., part of the New York City borough of Queens.

The addition of Kinray will establish a stronger platform for Cardinal in the Northeast as well as diversify and broaden its customer mix, the Dublin, Ohio-based pharmaceutical and health care products distributor said.

"Adding Kinray to the Cardinal Health Pharmaceutical Segment portfolio will enable us to build on our increasing presence in community pharmacy and accelerate our growth in this important channel," George Barrett, chairman and chief executive officer of Cardinal, said in a statement. "We are excited to have the Kinray employees join the Cardinal Health family, and we look forward to their contributions.

"Kinray has a long-standing service tradition with its customers," Barrett added. "We intend to continue that tradition, utilizing its customer expertise and Whitestone distribution facility while creating additional value for its customers through branded pharmaceutical programs, inventory and pharmacy management tools and Cardinal Health’s extensive generic drug program."

Pending regulatory approvals, Cardinal expects to close the acquisition by the end of 2010 or early in 2011.

"Joining forces with Cardinal Health supports Kinray’s mission to help retail independent pharmacies serve as an integral provider of care for our evolving health care system," stated Stewart Rahr, president and CEO of Kinray. "The combination of Kinray’s distribution model with the benefits of the value-added services offered by Cardinal Health will benefit our customers, making them even more efficient and successful in caring for their patients. It also provides our people with the opportunity to join one of the world’s premier health care companies — one that understands the value we bring to the retail independent pharmacies we serve."

Rahr told The New York Times that at some point he plans to step down as CEO and stay as an adviser during a transition period.

Cardinal said that once the deal is finalized, Kinray customers will be able to tap into its leading line of service offerings, including its SOURCE Generics program and additional tools that help improve the back-office efficiency of retail pharmacies, such as inventory management tools, reimbursement services, managed care contracting services, specialized care centers and local store marketing programs.

*Editor’s Note: Article updated on Nov. 19 with information on Stewart Rahr.