NEW YORK (The Deal) -- Germany's Bayer (BAYRY) on Wednesday agreed to sell its diabetes care business to Kohlberg Kravis Roberts-backed Panasonic Healthcare Holdings as the financial investor buyer adds to its two-year-old acquisition.

Panasonic Healthcare, which is based in Tokyo and 80%-owned by KKR (KKR - Get Report), would pay €1.02 billion ($1.15 billion) for the unit in a deal expected to close in the first quarter.

"Together, we will leverage our experience and network to create a global diabetes care solutions powerhouse in an effort to make this a transformational transaction for the diabetes care industry," said KKR European head Johannes P. Huth in a statement.

KKR bought Panasonic Healthcare two years ago from Panasonic Corp. (PCRFY) in a deal valued at $1.7 billion. Panasonic Corp. thought it didn't have the capital or resources to properly expand the unit, which makes medical devices and related software including products for diabetics.

Wednesday's acquisition is the company's first big acquisition under KKR and will broaden Panasonic Healthcare's distribution network, the buyer said.

The Bayer business includes Bayer's Contour blood monitoring devices for measuring blood sugar as well as analytical software and the related lances to extract blood. The unit had €909 million in sales last year.

Bayer Chief Executive Marijn Dekkers has been working to rid the company of assets that don't fit its strategic focus and which weigh down its share price with a conglomerate discount. His reshuffle included an unsuccessful attempt to sell the diabetes business two years ago before it was put back on the block in November.

An initial public offering of Bayer's plastics unit, announced in September, is still planned for the middle of next year. The division is expected to be valued at about €10 billion.

"We are confident that the sale of our diabetes care business to our long-standing partner Panasonic Healthcare, with the strong backing of KKR, will support the long-term sustainability of this portfolio," Bayer HealthCare Chief Executive Werner Baumann said in a statement.

The Leverkusen, Germany-based seller now gets about 70% of its revenue from drugs and, a year ago, announced a $14.2 billion agreement to buy the over-the-counter remedies division of Merck (MRK - Get Report). That purchase brought the inventor of aspirin, Claritin allergy medications and Dr. Scholl's foot care products.

Read more from: