Southern Cross Healthcare, the UK’s largest care homes operator, has acquired Avery Healthcare Ltd from its management and private equity owners Graphite Capital for £96.5m, including assumed debt.

The deal gains Southern Cross 15 purpose-built care homes containing 845 beds, primarily located in the North East. Southern Cross intends to sell the freehold interest and retain the leasehold operating business, in keeping with the company’s unique strategy. Following the acquisition, Southern Cross will now operate some 33,816 beds in 667 homes.

Chief executive Philip Scott said: “The acquisition of Avery continue a busy period for Southern Cross, as we progress our strategy to lead the consolidation of the elderly care market in the UK.”

The UK care homes sector is highly fragmented, with Southern Cross still only operating around 7 per cent of the market.

Avery’s management team will now head a new company, Optimum Healthcare, which will originally consist of five care homes not included in the Southern Cross deal and will pursue “a rapid expansion strategy.”