Hill-Rom Holdings, a maker of hospital equipment, wound-care and surgical products, said it would buy privately held Welch Allyn for about $2.05 billion to expand into the point-of-care diagnostics market.
Welch Allyn makes medical equipment that allow physicians to carry out diagnostic tests at or near the site of patient care.
Welch Allyn shareholders will receive $1.625 billion in cash and about 8.1 million newly-issued shares of Hill-Rom common stock.
At the closing of the deal, expected in September, Welch Allyn's 75 shareholders will own about 13 percent of the combined company.
The combined company is expected to generate revenue of $2.6 billion and over $500 million in Adjusted EBITDA, Hill-Rom said.
The acquisition is expected to add over 10 percent to Hill-Rom's 2016 adjusted earnings.
Hill-Rom, which also reaffirmed its outlook for the third quarter, expects to finance the deal through a combination of equity and senior debt.
Goldman Sachs was financial adviser to Hill-Rom, while Barclays advised Welch Allyn.