HONG KONG—KKR & Co.-backed Panasonic Healthcare Holdings Co. is buying Bayer AG's diabetes-care business for just over €1 billion ($1.13 billion), a move that builds out a global distribution channel for the Japanese health-care company.

Japanese companies are increasingly hunting abroad for acquisitions that can help them grow revenues and build out their sales and distribution channels.

Panasonic Corp. sold 80% of its medical-devices business to KKR last year with the aim of building the global reach of the operations with the U.S. private-equity firm. Panasonic still owns 20% of Panasonic Healthcare.

Panasonic Healthcare and Bayer have cooperated extensively in the past, with Bayer marketing devices made by the health-care company, including exclusive arrangements to sell some Panasonic Healthcare products.

Panasonic Healthcare manufactures blood glucose monitoring meters and strips for diabetes patients in additional to medical information technology and a life sciences business.

The Bayer diabetes unit that Panasonic Healthcare is buying recorded sales of €909 million last year.

The deal is expected to close in the first quarter of 2016, the companies said in a statement.

Write to Rick Carew at rick.carew@wsj.com

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