The deal comes as Tennessee-based LifePoint and many of its peers face higher medical costs, fewer patient admissions and changes to reimbursement policies in Medicare and Medicaid that have pressured profits.
However, to compensate for the downturn, LifePoint has been beefing up its presence in rural regions including in Pennsylvania and Tennessee and streamlining operations at health-care facilities there.
The deal will bring together LifePoint and Apollo's RCCH HealthCare Partners, LifePoint said in a statement, confirming a Reuters report on Friday that the parties were in advanced talks for a buyout.
Apollo's deal — its biggest this year — is the latest in a recent surge in public investments by U.S. private equity, the highest since the 2007-08 global financial crisis.
With a record $1 trillion in cash at their disposal, top private-equity names have turned to health care. Just last month, KKR and Veritas Capital each snapped up publicly listed healthcare firms in multibillion-dollar deals.
Indeed, hospital operators are alluring to investors, Cantor Fitzgerald analyst Joseph France said. Because their operations are largely U.S.-based, hospital firms benefit more from lower tax rates than the average U.S. company, and are also more insulated from global trade uncertainties, France said.
Apollo's transaction value includes $2.9 billion of LifePoint's net debt and minority interest. The combined company will be led by current LifePoint Chief Executive Officer William Carpenter III.
LifePoint shares down some 27 percent in the past year jumped nearly 34 percent to $64.00 in premarket trading, $1 shy of Apollo's all-cash offer price.
Barclays, Citigroup, RBC Capital Markets and Credit Suisse will finance Apollo's acquisition. PSP Investments Credit USA and an affiliate of Qatar Investment Authority will also provide part of the debt financing.
LifePoint will accept competing bids until Aug. 22, it said.