The proposed deal had been referred to the EU after the UK Office of Fair Trading raised concerns that it affected competition especially in three local authorities, Arbroath, Nottingham and Port Talbot. But EU regulators argued that the UK nursing-home market was local in scope and the deal would not affect a substantial part of the common market and so was not a European issue.

If completed, the euro 813.2-million ($1.1-billion) deal would make Blackstone's TBG CareCo Ltd. the UK's largest nursing-home owner, based on number of homes. Highfield Care, a wholly owned subsidiary of NHP, is the UK's fourth-largest operator based on number of beds managed, after BUPA, the Four Seasons group of nursing homes and Westminster Healthcare. Blackstone's bid to buy NHP comes just two months after the investment firm's acquisition of Southern Cross Healthcare, which manages care homes and is one of NHP's main tenants, from West Private Equity for euro 234 million ($305 million).

Aside from competition issues in the three local authorities at the center of the Blackstone-NHP deal, the national care home market is fragmented and seen as ripe for consolidation. This has attracted strong interest from private equity investors. A recent report by Colliers CRE notes: "The venture capitalists are attracted by the sound fundamentals of the sector based on the rising elderly population and the shortage of good, new care-home stock, caused in part by the rapidly rising land prices of the last few years.

"Corporate and investor activity will remain high," the report continues, "with further consolidation to be expected." The Top 10 care providers have less than 15% share of the total sector. To put this figure in context, the top 10 hotel operators in the UK have a 27.4% share of the hotel sector, while the top 10 pub owners have a 40.4% share of pub ownership. This means, according to one city analyst, that venture capitalists will be watching closely to see what decision the UK regulatory operators make on the Blackstone-NHP deal.