Health care products distributor Henry Schein has announced that it is spinning off its animal health business and merging it with Vets First Choice to form Vets First Corp.

The deal is expected to close by year-end.

Under the deal, Henry Schein's veterinary supplies, software for practices and its distribution network will merge with Vets First Choice's prescription management platform. The goal will be to create a new platform by which veterinarians can grow their practices, improve client engagement and drive better health outcomes for pets.

Henry Schein expects to receive between $1 billion and $1.25 billion in cash on a tax-free basis as part of the transaction. Its shareholders will own about 63% of the new company, and Vets First Choice shareholders will own about 37%.

According to Henry Schein, the spinning off and merging of its animal health business will allow it to focus more on its dental and medical supply businesses. "Some people felt this (deal) is perhaps to fend off online retailers, but it has absolutely nothing to do with that. This is about bringing two great companies together where (veterinary) practitioners will be more successful," Henry Schein chief executive officer Stanley Bergman said in an interview with CNBC.

Ben Shaw will become CEO of Vets First Corp. Henry Schein will nominate six board members, and Vets First Choice will nominate five. Bergman will serve on the board while continuing to serve as CEO of Henry Schein.

"By combining forces with (Henry Schein Animal Health), we anticipate accelerating the introduction of new and enhanced programs, services and technology to veterinary teams so they can deepen their focus on doing the great work of caring for the animals in our lives," Shaw said in a statement.

Henry Schein’s animal health business posted $3.48 billion in revenue last year. Within three years, Vets First Corp. is expected to accelerate revenue growth, potentially adding more than $100 million in operating income.