(Story updated at 4:30 p.m. ET.)
Two years after Nashville-based Vanguard Health Systems' initial public offering, the nation's smallest publicly traded hospital operator said it would join forces with Tenet Healthcare Corp. in an all-cash, $1.8 billion deal.
For Dallas-based Tenet, the acquisition allows it to enter new markets quickly, build strength in its current stronghold of Texas and take advantage of Vanguard's health plan assets, such as Phoenix Health Plan in Arizona. The hospital giant said it will pay $21 per share and also assume $2.5 billion in Vanguard's debt, bringing the total price tag to $4.3 billion. Vanguard shares closed Friday at $12.37, exactly one year after its initial public offering priced at $18 per share.
If the transaction goes through—expected by the end of 2013—it would be the largest among investor-owned hospital chains in recent years. Tenet was itself a takeover target not long ago when Community Health Systems initiated a hostile bid that ultimately failed.