Accretive Acquisition

What is an 'Accretive Acquisition'

An accretive acquisition is 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.

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RELATED FAQS
  1. What are some common accretive transactions?

    Find out about accretive transactions and how analysts determine whether or not an acquisition is accretive or dilutive by ... Read Answer >>
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    Read about the differences between an accretive and dilutive financial transaction, particularly as it pertains to a mergers ... Read Answer >>
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    When a firm acquires another entity, there usually is a predictable short-term effect on the stock price of both companies. ... Read Answer >>
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