United Parcel Service (UPS) has agreed to acquire Canada's Andlauer Healthcare Group in an all-cash deal worth around 2.2 billion Canadian dollars ($1.58 billion), as the US package delivery giant looks to strengthen its healthcare logistics offering.

Under the deal terms, Andlauer shareholders will receive CA$55 a share, representing a roughly 31% premium to the company's last closing stock price on the Toronto Stock Exchange. UPS expects Andlauer's offerings that include temperature-controlled facilities to boost its healthcare logistics division.

"Andlauer Healthcare Group will help us deliver expanded capability to our customers, driving best in class patient outcomes while contributing to our overall growth plans across the business," Kate Gutmann, president of international, healthcare and supply chain solutions for UPS, said in a Thursday statement.

UPS shares were up 1.4% in midday trade.

The deal, which requires approval from Andlauer's shareholders and clearance from regulators, is expected to be completed in the second half of the year, the companies said in separate statements. Andlauer Chief Executive Michael Andlauer and Andlauer Management Group, the company's controlling shareholder, have agreed to vote their shares in favor of the deal.

Andlauer's shares will be delisted from the TSX following the deal's completion.

"Once the transaction is completed, the businesses will offer an even broader set of specialized logistics services to customers throughout Canada," said Michael Andlauer, who will lead UPS Canada Healthcare.

The transaction includes a termination fee of CA$66 million, to be paid by Andlauer to UPS if it terminates the agreement in favor of a superior alternative acquisition proposal. UPS will be liable to pay CA$110 million to Andlauer if the deal is not completed in certain circumstances, including a failure to obtain regulatory approval, Andlauer said.