Fyffes has moved into the North American mushroom market, acquiring Canadian producer Highline Produce for CAD$145 million (€97.7 million). Highline is the market leader in Canada and US customers represent 35 per cent of annual revenues.

Fyffes, whose shares rose sharply on Friday after the announcement, will acquire 100 per cent of the equity in Highline and refinance its existing debt. Fyffes is funding the purchase through new and existing bank debt. The fruit company’s shares were up almost 8 per cent in Dublin trading, following the news.

Highline is a fully integrated mushroom business operating from five facilities, with three quarters of sales directly to retailers. Highline’s existing management team will remain in place. The acquisition is being funded through new and existing debt.

Fyffes said it had based its valuation of Highline on an 8.1 times multiple of annualised EBITDA ( earnings before interest, tax, depreciation and amortisation) . Fyffes net debt after the acquisition will be less than 2.5 times EBIDTA, falling below 2 times within 2 years.

Fyffes said that the purchase will add immediately to earnings , resulting in a 13 per cent increase in its existing 2016 target. In a note on the issue, Davy Stockbrokers said that the acquisition further diversifies the company’s earnings base, in line with management goals.

Fyffes chairman David McCann said that the transaction “fits perfectly with Fyffes’ strategic objective of adding an additional product to its existing three through the acquisition of an established, successful, integrated operator in a category with significant scale.”