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Psychiatric Solutions Inc., a for-profit operator of mental-health hospitals and clinics, is in talks to be acquired by private-equity firm Bain Capital, according to several people familiar with the matter.

Psychiatric Solutions has a market capitalization around $1.35 billion. An exact takeover price couldn’t be determined Wednesday, but the firm was seeking around a 25% premium to its current market price, said people familiar with the matter. Any deal would include the assumption of Psychiatric Solutions’s outstanding $1.2 billion of debt.

Shares in the company, the largest for-profit psychiatric chain in the country, were trading near $30 last year. They were trading below $24 Wednesday afternoon. An agreement is still more than a week away, according to people familiar with the talks, though the deal may still fall apart in its final stages.

Private-equity firms have been in discussions with Psychiatric Solutions since last fall. CCMP Capital Advisors and Kohlberg Kravis Roberts & Co. looked at the business but eventually passed. Blackstone Group was also considering merging the company into its hospital chain Vanguard Health Systems Inc., according to people familiar with the firm’s thinking.

Boston-based Bain is now the most likely buyer. The firm is one of the lead investors in Nashville, Tenn.-based HCA Inc., the nation’s largest hospital operator, which Bain and KKR acquired for $21.3 billion in 2006.

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Bank of America Merrill Lynch is both advising and financing Psychiatric Solutions on the deal. Jefferies & Co. is providing additional financing.

A deal would show how the stabilization in corporate lending markets is encouraging private buyers such as Bain to put money to work. And a $3 billion acquisition would be among the largest leveraged buyouts struck since the credit markets collapsed in mid-2007.

In the past two weeks, Thomas H. Lee Partners agreed to acquire CKE Restaurants Inc., the parent company of Hardees and Carl’s Jr. restaurants for about $620 million; Abry Partners announced a deal to acquire cable operator RCN Corp. for $531 million; and CCMP purchased Infogroup Inc. for $460 million.

Psychiatric Solutions has more than 90 psychiatric hospitals and treatment centers in 32 states, with a heavy concentration in the East and Southeast. It has about 20,000 employees. The firm specializes in treating children with behavioral or mental illnesses. Besides its own sites, it also manages psychiatric units for other hospitals and government agencies. It reported 2009 sales of $1.8 billion.

Psychiatric Solutions has faced a number of allegations regarding the treatment of its patients, which has affected the company’s stock price. In July 2008 the Chicago Tribune published a report disclosing alleged unreported violence among juvenile patients at its Riveredge Hospital facility in Forest Park, Ill. A state-commissioned study by the University of Illinois-Chicago, published in August 2009, concluded that the facility failed to protect young patients from sexual assault and didn’t properly report attacks to authorities.

In February 2009, the company’s stock dropped 36% to a four-year low of about $10 per share after it reported weak earnings results attributable in part to the issues at Riveredge.

Write to Jeffrey McCracken at jeff.mccracken@wsj.com and Peter Lattman at peter.lattman@wsj.com

U.S. Treasury Secretary Timothy F. Geithner discussed global financial regulation and Greece’s efforts to stem its budget crisis in a meeting with Greek officials today, the Treasury Department said in a statement.

Geithner met with Greece’s Prime Minister George Papandreou and Finance Minister George Papaconstantinou in Washington. In addition to Greece’s budget plan, the discussions addressed efforts by Europe and the U.S. to improve financial oversight and increase supervision over derivatives markets.

To contact the reporter on this story: Rebecca Christie in Washington at rchristie4@bloomberg.net

To contact the editor responsible for this story: Brendan Murray at brmurray@bloomberg.net

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Merger activity dominates a mixed trading session. AIG sells second unit, McDonald’s posts higher sales.

U.S. markets had a mixed start to the week as investors cooled off after last Friday’s big rally on employment data.

Financial shares drew attention again as American International Group ( AIG - news - people ) agreed to sell a life insurance subsidiary to MetLife ( MET - news - people ) for $15.5 billion and Bank of New York Mellon ( BK - news - people ) made a purchase. Other merger news came from the energy sector where Royal Dutch Shell ( RDSA - news - people ) and PetroChina ( PTR - news - people ) said they will join forces to buy an Australian firm.

The major indexes wobbled in and out of positive territory for most of the day. The Nasdaq outpaced with a gain of six points, or 0.3%, to close at 2,332. The Dow Jones Industrial Average lost 14 points, or 0.1%, to 10,553 and the S&P 500 was down less than a point to 1,139.

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AIG’s sale was the second major divestment by the troubled insurer in recent days, after it agreed to sell one of its units to Prudential. The news boosted AIG shares by 3.6%. (See “AIG Wraps Up Deal With Metlife”)

McDonald’s ( MCD - news - people ) told investors its sales at locations open a year or more grew by 4.8% last month. Strong growth overseas compensated for a relatively lackluster U.S. market. Shares were up 2.3%. (See “McDonald’s Hits The Spot”)

Health insurers had a tough session thanks to criticism from the White House and uncertainty over health care reform. UnitedHealth Group ( UNH - news - people ) lost 1.9% and Aetna ( AET - news - people ) fell 0.5%.

In earnings, H&R Block ( HRB - news - people ) told investors after the closing bell that it made 15 cents a share last quarter, a penny better than Wall Street had anticipated but fewer tax returns meant sales dropped 6% to $935 million. Investors lopped 2% off the stock in late trading.

Treasury bonds had a mixed performance with the yield on the 10-year benchmark note up 0.03% to 3.72%. The U.S. dollar gained against foreign currencies.

The Associated Press contributed to this report.