Rexam has agreed to sell its glass business to Irish glassmaker Ardagh for €660m (£449m), in a deal that will double Ardagh in size and create the third largest glassmaker in Europe. The sale is subject to approval from competition authorities in Poland and Germany.

Rexam has divested its glass unit in order to continue its strategy of concentrating on high- growth markets. Rexam Glass reported 2006 sales of £437m, with an operating profit of £40m, before allocation of central costs. Focusing on the European market, it will add 13 glass plants and 3,600 staff in Denmark, Germany, Holland, Poland and Sweden to Ardagh’s nine existing plants and 3,300 employees in Germany, Italy, Poland and Britain, boosting annual sales to €1.25bn.

Dublin based Ardagh will fund the deal with €338m debt from a syndicate of banks including the Anglo Irish Bank, a €300m bridge loan facility arranged by Citigroup, a €10m equity rights issue and €40m from its own cash resources. Rexam plans to use the proceeds to lower its borrowings.

Ardagh Chairman Paul Coulson said “ following the acquisition, Ardagh will…become the number three glass container manufacturer in Europe with approximately 18 per cent of the market. The acquisition will provide us with opportunities to achieve greater operating efficiencies and to further develop our customer relationships.”

Leslie Van de Walle, Rexam’s CEO commented “Rexam Glass is a strong, well run operation and will fit well with Ardagh, a dedicated player in glass. Rexam’s strategy remains to focus on profitable growth in its core Beverage Can and Plastic Packaging businesses. We have a strong track record of achieving high rates of return on our investments and the proceeds from this sale provide the financial flexibility to generate attractive long term returns for our shareholders.