NEW YORK (CNN/Money) - Merck & Co. said Thursday it will offer 20 percent of its Medco pharmacy benefits management unit in an initial public offering that could raise up to $1.1 billion for the pharmaceutical firm.

Merck said it will offer 46.7 million shares in the IPO at an expected price of $22 and $24 a share.

The Whitehouse Station, N.J.-based firm said it will hold 80 percent of Medco after the offering, but it expects to sell the remaining stake in Medco in a tax-free transaction a year after the IPO.

Goldman, Sachs & Co. and J.P. Morgan will co-lead the offering and have a "greenshoe" option - or an over-allotment option - to purchase an additional 7 million Medco shares from Merck after the offering.

Merck-Medco's revenue grew to $26 billion in 2001 from $2.2 billion in 1992, and it manages more than 537 million prescriptions annually. Merck-Medco is also the world's leading Internet pharmacy, serving more than 1,700 clients.

Shares of Merck (MRK: Research, Estimates) gained 8 cents to close at $52.03.