Glass bottler Ardagh will acquire German rival Hermann Heye for around €35.5 million under the terms of an option agreement announced yesterday.

Ardagh plans to exercise the option agreed with Yeoman International, whose chief executive Mr Paul Coulson, is also chairman of Ardagh. Yeoman is a major shareholder in Ardagh.

In a statement, the company said both parties had entered the option agreement yesterday. Ardagh chief executive Mr Eddie Kilty has been running the German company since last Friday.

When Heye Glass originally announced the deal, it stated that Yeoman/Ardagh had purchased the company from insolvency and quoted the financial performance of Ardagh, not Yeoman, in its release.

The deal was agreed on December 20th, the same day Ardagh announced plans to demerge its glass container manufacturing operations from the listed company and place them in a private company based in Guernsey.

Mr Kilty last night said the announcements could not have come simultaneously as the Heye deal was not concluded until after markets closed that evening, and even then it was dependent on finalising the terms of the financing.

The company's statement explained the use of Mr Coulson private group Yeoman for the deal by saying it had been able to "acquire the assets within the tight time frame demanded by the insolvency administrator of Heye". The German company has been in insolvency for 18 months.

Mr Kilty said several other glass companies had been eyeing a deal with Heye and Ardagh would not have had the time to go through the process of circulating the details of the deal and holding an extraordinary general meeting to approve the purchase as required by public companies.

"I believe we would have lost Heye Glass if it was not for Paul and Yeoman," he said.

Heye manufactures glass at two facilities in Germany. Another company in the group, Heye International, is a cutting-edge provider of glass manufacturing and inspection equipment. Heye International has been profitable throughout the insolvency period and Ardagh says a restructuring, which will see up to 265 of the 900-strong workforce let go, should return the glass-making operations to profit in the near future.

Ardagh can exercise its option at any time before June 30th and intends to do so once the demerger is approved.