July 23 (Reuters) - Medical supplies distributor Owens &

Minor ( OMI ) said on Tuesday it has agreed to buy medical

equipment firm Rotech Healthcare for $1.36 billion in cash to

expand its presence in home-based care.

The deal will give Owens & Minor ( OMI ) access to Rotech's

portfolio of home medical equipment, including those used for

treatment of sleep apnea and diabetes.

Owens & Minor ( OMI ) expects to use a combination of cash and debt

to fund the transaction.

In August, people familiar with the matter said Rotech was

exploring a possible sale.

Rotech, which partners with insurance companies to provide

patients with medical equipment, offers fee-for-service

arrangements to its customers for equipment such as stationary

and portable home oxygen equipment, ventilators, and continuous

positive airway pressure (CPAP) machines.