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.
(Copyright 2012 by The Associated Press. All Rights Reserved.)