Accretive Acquisition


DEFINITION of 'Accretive Acquisition'

An acquisition that will increase the acquiring company's earnings per share (EPS). These acquisitions tend to be favorable for the company's market price because the price paid by the acquiring firm is lower than the boost the new acquisition will provide to the acquiring company's EPS.

BREAKING DOWN 'Accretive Acquisition'

As a general rule, an accretive merger or acquisition occurs when the price-earnings (P/E) ratio of the acquiring firm is greater than that of the target firm.

  1. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing ...
  2. Acquisition

    A corporate action in which a company buys most, if not all, ...
  3. Earnings Per Share - EPS

    The portion of a company's profit allocated to each outstanding ...
  4. Dilutive Acquisition

    A takeover transaction that will decrease the acquirer's earnings ...
  5. Accretion

    1. Asset growth through addition or expansion. 2. In reference ...
  6. Target Firm

    A company which is the subject of a merger or acquisition attempt. ...
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  1. How long does it take to execute an M&A deal?

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  2. What are some common accretive transactions?

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  4. How is a tender offer used by an individual, group or company seeking to purchase ...

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  5. How does a company record profits using the equity method?

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