Tenet Healthcare and United Surgical Partners International (USPI) will combine their ambulatory and short-stay surgery centers in a deal that will give Tenet the option to buy USPI over the next five years.
Tenet will pay $425 million to private equity firm Welsh, Carson, Anderson & Stowe and other USPI shareholders and assume $1.5 billion of USPI's debt for a 50.1 percent stake in the venture.
Tenet said the deal would create the largest provider of ambulatory surgery in the United States with 244 ambulatory surgery centers, 16 short-stay surgical hospitals and 20 imaging centers in 29 states.
Tenet also said it would buy U.K.-based Aspen Healthcare from Welsh Carson for about $215 million in cash.
Tenet said it expects to raise $2.2 billion in debt, which would mainly be used to refinance USPI's debt.
The Wall Street Journal on Sunday reported Tenet was nearing a deal to buy USPI.
J.P. Morgan and Lazard are Tenet's financial advisers and Gibson, Dunn & Crutcher is its legal counsel.
USPI and Aspen are being advised by Barclays and Goldman Sachs. USPI's legal adviser is Ropes & Gray.