GLENMORANGIE has acquired the mothballed Ardbeg distillery on Islay from Allied Distillers for #7m and intends to reactivate it.

Managing director Peter Darbyshire said he planned to invest about #500,000 in restoring the distillery to full working order by August.

The purchase price, to be paid in instalments over three years, consists of #1.6m for the distillery and its assets and #5.4m for bottled and vatted stock.

Glenmorangie already owns a flagship distillery at Tain in Easter Ross, producing a smooth flavoured Highland malt whisky and the Glen Moray distillery on Speyside.

Mr Darbyshire said Ardbeg will give the company a niche for the first time in the Islay whisky market.

But he said there was no danger of Ardbeg stealing market share from Glenmorangie since the two malts were at opposite ends of the market catering for entirely different tastes.

''If you take Glenmorangie as being one end of the spectrum, the lightest and most delicate of the Highland malts, Ardbeg is absolutely the other end, the most pungent and the most peatiest of the Islays,'' he said.

''Ardbeg is the strongest tasting of all the Islays and that is the great attraction for us.''

Mr Darbyshire said the reactivation of Ardbeg would create about 10 extra jobs in Islay in the short term and perhaps more in the future. Allied mothballed the distillery in July and predicted then that it would remain closed until at least the year 2000.

Glenmorangie conservatively plans to market 5000 cases of Ardbeg malt this year, rising to 30,000 or 40,000 in 10 years time.

This rather modest output will be aimed mainly at the UK, US and duty-free markets.

Allied Domecq said it had sold Ardbeg to concentrate on promoting malts from its nearby Laphroaig distillery. Laphroaig accounted for about 70% of Allied's overall sales of single malt whisky last year.

An Allied spokesman said there were no plans to

sell any more of the

group's 12 remaining

whisky distilleries, but Allied was close to

finalising the sale of its Robert Kilgour maltings in Kirkcaldy to a firm called Munton's.