The Ardagh board has rejected a second higher bid for its international glass-making operations from the Quinn Group.

The group, led by Mr Sean Quinn, returned with a higher bid yesterday, offering €1.70 a share for the business, some 60 cents better than the €1.10 being offered by Ardagh's board and management. Ardagh's directors met to discuss the new offer and again swiftly rejected it. The Quinn Group had previously offered €1.50 per share.

Commenting on the latest approach, Ardagh chief executive Mr Eddie Kilty said: "The directors unanimously reiterate their belief that the demerger is in the best interests of the company and its shareholders as a whole."

A Quinn Group spokesman said it was disappointed the company would not even discuss the bid. "Their approach does not seem to be in the best interest of their own shareholders," he said last night.

Ardagh continues to insist the Quinn bid undervalues the business. Ardagh shareholders concerned about the rejection of the first bid contacted the Irish Stock Exchange yesterday. A spokesman would not comment on the nature of their concerns.

Announcing its fresh approach yesterday, the Quinn Group said it had dealt adequately with all issues raised by the Ardagh board when its first offer was rejected.

"The structure of our offer has replicated Ardagh's own proposed structure and as an alternative we have said we will make a cash offer for the glass business.

"We now look forward to a positive response and to entering discussions with the independent directors of Ardagh as we believe our offer is in the best interests of the shareholders," the statement said.

Ardagh's independent directors are accountant Mr Bernard Somers and businesswoman Ms Margaret Downes. Quinn Group chief executive Mr Liam McCaffrey told The Irish Times yesterday that it was very confident the independent directors would be advised to consider this offer.

Ardagh shareholders have been asked to vote on a demerger of the group's glass container manufacturing businesses in Britain and Italy into a new unquoted firm based in Guernsey. Ardagh would continue to be listed on the Irish Stock Exchange trading as a firm with residual glass packaging manufacturing and a potential warehousing operation in Ringsend in Dublin.

Ardagh's biggest shareholder, venture capital group HgCapital, has given an irrevocable undertaking to support the demerger at €1.10 per share at a total cost of €11.7 million. Its shares would be taken up by Yeoman International, the investment vehicle owned by Ardagh chairman, Mr Paul Coulson. The Quinn Group is urging shareholders to reject the plan. "We are quite happy that if shareholders return proxies and vote no that there is a reasonable possibility that this deal [the Quinn Group offer] can go through," Mr McCaffrey said.

The Quinn Group is bidding for the glass business which the board is proposing to spin off from Ardagh, offering shareholders a €1.10 per share cash alternative if they do not want to retain shares in the demerged company.

The group has built up a 2 per cent stake in Ardagh in recent months.