UPDATE 1-McKesson to buy cancer drug business for $575 mln

(Adds company comment, background, share price)

NEW YORK, Oct 4 (Reuters) - Drug wholesaler McKesson Corp (MCK.N) said on Thursday it has agreed to buy Oncology Therapeutics Network, a U.S. distributor of cancer drugs, for about $575 million, broadening its specialty pharmaceutical business.

McKesson, which said the purchase price includes assumption of debt, said Oncology Therapeutics Network (OTN) has annualized revenue of about $3 billion.

The OTN business will be combined with McKesson Specialty, which is part of its Distributions Solutions segment, the company said.

"The integration of these two businesses will enhance our position in one of the fastest-growing categories of drugs in the United States," McKesson Chief Executive John Hammergren said in a statement, referring to cancer medicines.

OTN is one of the nation's largest distributors of specialty drug products, serving more than 3,500 oncologists and 1,500 rheumatologists, McKesson said.

McKesson said it still expects earnings to be between $3.15 and $3.30 per share for the fiscal year ending March 31, 2008, excluding restructuring and other charges.

Assuming the deal closes during the current quarter, McKesson said it expects the acquisition to be marginally dilutive to fiscal 2008 and fiscal 2009 earnings per share and to add to profits in fiscal 2010.

The San Francisco-based company also said its board has authorized a new, additional $1 billion share repurchase.

In the quarter ended Sept. 30, the company repurchased $425 million in stock, leaving $316 million remaining on a previous $1 billion share repurchase authorization.

McKesson shares closed up 72 cents, or 1.2 percent, to $59.30 on the New York Stock Exchange prior to the acquisition announcement. (Reporting by Bill Berkrot, editing by Tim Dobbyn)