Prescription drug distributor McKesson Corp. is expanding its medical supplies business by buying PSS World Medical Inc. for about $1.46 billion.

McKesson will pay $29 per share for PSS World, a 34.3 percent premium over Wednesday's closing price.

The San Francisco-based company values the deal at $2.1 billion including PSS World's debt.

PSS World, of Jacksonville, Fla., had $2.1 billion in revenue in its latest fiscal year. It will become part of McKesson's medical-surgical business. The deal requires the approval of PSS World shareholders.

PSS World shares climbed $7.16 per share to $28.76 in premarket trading

McKesson expects $100 million in annual savings in the fourth year after closing.

Gary Corless, the president and CEO of PSS World, will become McKesson's chief operating officer after the deal closes.