Fyffes expects earnings to ‘mushroom’ after new buy

Fruit distributor Fyffes has diversified its product offering with the €98m acquisition of Highline Produce, the largest mushroom producer in Canada.

The Dublin-based group will fund the purchase through new and existing bank debt and will refinance Highline’s existing debt facility in the process.

Retail customers account for 75% of Highline’s sales, with wholesale, foodservice, and canning customers representing the balance. US sales account for 35% of the company’s annual revenues.

Fyffes said the deal will be immediately accretive and will boost current year earnings per share by 13%.

Fyffes chairman David McCann said the transaction “fits perfectly” with the group’s 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.”

“The deal further diversifies the earnings base, in line with management objectives,” said Declan Morrissey of Davy Stockbrokers.

Darren McKinley of Merrion Stockbrokers said the deal is “very attractive” for a number of reasons.

“Firstly, it has given Fyffes a new growth market to focus on which is both high margin and within a high growth sub-industry within the food category,” he said.

“Secondly, they have now added a Canadian base to their North American presence which could potentially increase long-term opportunities, and thirdly, the valuation multiple has resulted in a 13% accretive deal.”

Fyffes published its latest annual report this week, which showed combined executive pay levels remained unchanged at just over €2.6m.