Shareholders in the glass group Ardagh have formally approved its acquisition of the Rockware glass production group.

Ardagh's chairman, Mr Paul Coulson, insisted after a shareholders' meeting yesterday that the acquisition was not "a rationalising play". "There is no capacity being shut as a result of this deal," he said.

Ardagh employs more than 350 people and through the £240 million sterling (€360 million) acquisition of the Yorkshire-based will take on another 1,100 employees and increase its manufacturing capacity of 135,000 tonnes by 500 per cent.

The intention is to develop the enlarged group as a significant European glass producer. "They have customers that we have not got, and we have customers that they have not got," Mr Coulson said.

The customer base was consolidating and had to be serviced through combining its suppliers. Two of its biggest customers had merged when Diageo was formed from Guinness and Grand Metropolitan.

"We need to be able to service these customers right across Europe," Mr Coulson said.

Ardagh had been faced with the option of selling into a bigger grouping or buying. However, according to Mr Coulson, the decision to acquire Rockware had not been influenced by Mr Sean Quinn's decision to enter the industry by building a glass factory in Co Fermanagh.

Ardagh would also be buying into new cost-saving technology, he said. Since 1993, Rockware's owners, BTR, has invested more than £160 million on furnaces and machinery. Its four plants produce 680,000 tonnes of glass compared to the 135,000 tonne capacity of Ardagh's Ringsend facility in Dublin. The combined companies would have a turnover of almost £250 million.

The group managing director, Mr Eddie Kilty, said Ardagh had been looking for an acquisition for some years. "A third of the UK market does not come up for grabs very often," he said.

Although it was not a high margin business, being a lowest cost producer was the key to success.

Mr Coulson told shareholders the move was "a very important first step" for Ardagh within the European glass industry.

Rockware had a fine track record, was the market leader in Britain, and was the ideal springboard for moving Ardagh forward.

Asked by a shareholder, Mr Neil Duggan, how he was going to address the "apparent lack of marketability of the shares", Mr Coulson said the proportionately small increase in Ardagh's issued shares, as part of the financing structure for the Rockware deal, was in the interest of shareholders. However, the board was conscious of the need to broaden the shareholder base and make the shares attractive for European institutions.

One shareholder, Ms Kitty Conroy, a daughter of one of the founders of Ardagh, Mr Richard Duggan, congratulated the board on the deal.