GUY HANDS is plotting to buy Bupa’s hospitals as part of an ambitious plan to build an international healthcare empire through Terra Firma, his private-equity group.

Terra Firma is already working this weekend to firm up an indicative £11.15-a-share bid for Alliance Boots, which controls Britain’s largest chain of chemists. Hands has also assigned a team to work full time on snapping up Bupa’s 26 hospitals, which could be worth £1.25 billion.

Bupa, Britain’s largest private healthcare group, which last year looked after 800,000 patients, has appointed Citigroup to handle the sale of its hospitals.

Hands is thought to be working with Macquarie, the Australian group that specialises in infrastructure investments.

One insider said: “Hands is very serious about buying Bupa’s hospitals. The portfolio fits well with his plans to put together an unrivalled healthcare business.”

Experts have predicted that the sale of Bupa could trigger a wider restructuring of the health sector. Private-equity groups such as Blackstone and Cinven are thought to be interested in the hospitals, as is the French private health group Générale de Santé. Several big Middle Eastern and Asian invetors are also expected to be keen.

Meanwhile, Terra Firma plans to open talks with the Boots board on Tuesday. It is expecting to gain limited access to the company’s books.

Debt financing for the Hands consortium bidding for Alliance Boots is being provided by HBOS, Lehman Brothers and a further seven banks. Equity will come from HBOS, the Wellcome Trust and Terra Firma itself.

Terra Firma faces several handicaps in trying to buy Alliance Boots. The healthcare group has agreed to pay an 11p-a-share “break fee” if the board withdraws its support for the £10.6 billion offer already made by the private-equity firm KKR.

And Alliance Boots has agreed that KKR will be given the details of any new bid from a rival if it considers switching its support to the newcomer. In effect, KKR will then have the option to top any competing offer.

Stefano Pessina, the single biggest shareholder in Alliance Boots and KKR’s partner, has not given hard details about what he wants to do if he wins the bid battle.

Analysts admit they had not expected the Boots price to be pushed so high as KKR and Terra Firma have squared up for battle.

One said: “There is still a suspicion that Stefano Pessina has spotted some huge value to be unlocked as a result of the deregulation of the European pharmacy market but hasn’t shared it with the other Boots shareholders.”

Boots shares closed at £11.25 on Friday, some 10p above the level at which Terra Firma said it may bid and 35p above the level of the KKR offer.

It is understood that private-equity buyers have recently made approaches for the whole of Bupa that would value the group at more than £5 billion. The offers were rejected.

Despite its non-plc status, Bupa is large enough to rank as a member of the FTSE 100.

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