Community Hospitals Group (CHG), the subject of a blocked takeover bid by Bupa last year, is in talks with Swedish healthcare group Capio.

An offer from Capio may start a bidding war for CHG as the UK's largest hospital group, General Healthcare, is also interested in the company.

The effect of General Healthcare's bid on the private healthcare market is currently being investigated by the Competition Commission.

Bupa has a 26.7% stake in CHG as a result of its failed bid, which the government has ordered it to sell.