Irish glassmaker Ardagh has refused to comment on reports that it has been selected as the preferred bidder for Rockware, the British glass group that must be sold off by Owens-Illinois.

There has been consistent speculation that Ardagh is a bidder for Rockware, which has an estimated value of £250 million. But the most recent reports have stated that Ardagh has beaten off competition from venture capital group Candover to get the approval of Morgan Stanley, the investment bank charged with finding a buyer for Rockware before the January 31st deadline for sale imposed by the European Commission.

A spokesman for Ardagh would only say the Irish group was "in the process" of looking at Rockware. But if the most recent report that Ardagh is now the preferred bidder is correct, it would seem Morgan Stanley is satisfied that Ardagh is capable of putting together a financing package for a deal of this scale.

Ardagh currently has a stock market value of only £40 million - less than one-fifth the size of Rockware - so any financing package would require some extremely creative financial engineering. As Owens-Illinois has been ordered to sell its glass assets by the EU, the option of Ardagh issuing its own shares to Owens Illinois to cover the cost of the acquisition does not exist.

Debt finance on this scale would simply swamp Ardagh's balance sheet, so a major share issue to institutional investors would seem to be the only realistic option.

Ardagh has had a dismal share price performance in recent years - the shares have under-performed the ISEQ Index by 12 per cent in the current year - so institutional investors will probably need some serious persuasion that Ardagh has the managerial wherewithal to handle an acquisition of this size.

Ardagh's prospects of raising large amounts of equity finance are boosted, however, by the quality of its shareholder base.