Rival bidders emerge for big buyouts

NEW YORK (CNNMoney.com) -- The pace of buyouts shows few signs of slowing, but the days of private equity firms closing on deals without a fight may be ending.

On Monday, hospital operator Community Health Systems (Charts) said it would buy Triad Hospitals, one of the nation's largest health care companies, for $5.1 billion in cash. Including the assumption of debt, the deal is valued at $6.8 billion.

Under the agreement, Triad (Charts) terminated its deal to be bought by CCMP Capital Advisors and the private equity arm of Goldman Sachs, which had offered an all-cash $4.5 billion bid early last month.

The move is the latest deal in a frenzied market for buyouts. Elsewhere on the deal front on Monday, lawn care and pest control provider ServiceMaster (Charts) said it agreed to be bought by private equity firm Clayton, Dubilier & Rice for $4.7 billion.

Buyout firms accounted for one-fifth of the $3.8 trillion in deal activity last year, according to Thomson Financial. But the environment for securing these deals looks to be getting tougher as rival bidders emerge.

"There have been so many private equity deals that have gone unchallenged," said Linda Varoli, vice president of research at Wall Street Access, a New York brokerage. "The pendulum may be starting to swing a bit for strategics," she said.

Growing backlash against private equity, which has come under scrutiny by shareholders and regulators alike, has helped contribute to competing bid action.

In an effort to ward off shareholder criticism, companies entering into deals with private equity firms have been mindful to establish low breakup fees and implement "go shop" periods during which they can accept competing offers, Varoli added.

Triad had to pay a mere $20 million to back out of its deal with CCMP and Goldman.

As corporate buyers and private equity firms compete for targets, more bidding wars may break out - and some already megasized deals may end up heading even higher, market analysts say.

Just last month, private equity powerhouse Blackstone Group got ensnared in a heated bidding war for Equity Office Properties Trust when Vornado Realty (Charts) jumped into the fray.

Blackstone emerged triumphant but had to raise its bid sharply for Equity Office over a span of a few weeks. The buyout firm ended up paying $23 billion in cash for the nation's largest office property owner, or about $3 billion more than had been initially agreed upon.

The biggest buyout of them all could also become the focus of a fierce bidding war.

TXU Corp. (Charts) agreed last month to be taken private for $32 billion by Kohlberg Kravis Roberts and Texas Pacific Group, making it the biggest buyout on record.

But private equity giants Blackstone Group, Carlyle Group and Riverstone Holdings are considering a rival offer for the Texas utility, the Financial Times reported Monday.

The deal landscape may be growing more intense, but private equity firms -considered some of the savviest deal makers on Wall Street - undoubtedly are looking out for ways to stay one step ahead of their rivals.

Wall Street has been buzzing with talk that Blackstone Group is considering an initial public offering - a move that would give the private equity titan a valuable new form of currency with which to compete for deals, private equity experts said.

Blackstone IPO: Opening up doors?