Triad Hospitals said on Monday it agreed to be bought by Community Health Systems
Triad shares rose on the news, while Community shares slumped , both on the NYSE.
Nashville, Tennessee-based Community Health agreed to acquire Triad for $54 per share in cash, or about $6.8 billion, including $1.7 billion in debt.
The deal, subject to Triad shareholder approval, tops a $4.7 billion agreement announced six weeks ago for Triad to be purchased by CCMP Capital Advisors and Goldman Sachs Capital Partners, the private equity arm of Goldman Sachs Group .
"The key question is if synergies from a Community-Triad merger are big enough to make up for the premium Community would pay for Triad in a potential deal," Stanford Group analyst Gary Lieberman said in an analyst note.
He said the answer to that is still unclear, but noted Community is the sole provider in its current markets.
Areas of regional overlap include eastern Texas, Arkansas, Tennessee, Alabama, South Carolina and New Mexico, he added.
Community had revenue of $4.37 billion in 2006, while Plano, Texas-based Triad earned revenue of about $5.54 billion.
The biggest publicly traded hospital chain now is Tenet Healthcare
Private equity firms have been looking more closely at hospital companies after HCA -- the biggest U.S. hospital chain -- accepted a $22 billion management-led leveraged buyout last year.
The U.S. hospital industry has been suffering through a long period of weak fundamentals, spurred in part by the rising numbers of patients without health insurance and slowing patient admissions amid escalating overall health-care costs.