UPDATE 1-Service Corp to buy Keystone North America for $200 mln

* Deal valued at $256 mln, including debt

* Offer price at 24 pct premium to Keystone's Wed close

* Deal to add to Service's cash flow, earnings in 2010

Oct 15 (Reuters) - Funeral-home operator Service Corp International (SCI.N) agreed to buy rival Keystone North America Inc (KNA.TO) for about $200.1 million.

The offer price of C$8 per share is a premium of 24 percent to Keystone's Wednesday closing price of C$6.45. The company had 25.6 million shares outstanding as of Sept. 30.

Including Keystone's debt, the deal is valued at about $256 million.

The deal is expected to close in the first quarter of 2010 and add to Service Corp's cash flow and earnings in 2010.

Service Corp has substantial cash on hand to fund the transaction, and has also received a commitment letter from JPMorgan Chase Bank (JPM.N) and Bank of America (BAC.N) for a $250 million bridge facility, the Houston-based company said in a statement.

Shares of Service Corp closed at $6.96 Wednesday on the New York Stock Exchange.

($1=1.022 Canadian Dollar) (Reporting by Nivedita Bhattacharjee in Bangalore; Editing by Anne Pallivathuckal)