Bupa is expected to offer £20m above market value to acquire the Community Hospital Group, in a bid to outdo rival offers believed to be from PPP, General Healthcare and Nuffield.
Bupa, the UK's largest private medical insurer is expected to offer £217m for CHG – or 620p per share.
If successful, it would make the PMI provider the UK's largest operator of private hospitals.
Bupa already owns 37 hospitals, and a successful bid would add 21 hospitals to the group. Currently Bupa has 40% of the market share, followed by PPP with 31%, Western Provident Association with 4% and BCWA with 2%. CHG, which has 21 hospitals, is presently valued at around £197m.
One analyst said about Bupa's anticipated bid: "It's a very full price. CHG shareholders would probably have bitten their hands off with an offer of around 590p, but they want to land a knock-out blow."
Bupa's director of corporate communications, Peter Jones, said: "CHG is the fourth largest operator, and a successful bid would give us access to a number of new markets which would fit with existing Bupa hospitals and business."
Bupa had a pre-tax profit of £46.7m for 1999 against a figure of £41.9m for 1998.
However, smaller insurers and hospital groups claim to be angered by the moves by Bupa and PPP. They believe a successful bid from vertical integrated groups would restrict the private healthcare market.
WPA's director of corporate communications, David Ashdown, said: "A monopoly situation may result from a successful bid of a major player."
The Office of Fair Trading, in a report published last year, said any further acquisitions made by health insurers would be examined closely.
Bupa said a further announcement will be made in due course.
Officials from CHG have announced that the bids may or may not lead to an offer.