In an all-stock deal with no synergies, what is the quick rule for whether the deal is accretive to the acquirer's EPS?
- A. The deal is accretive if the target is smaller than the acquirer
- B. The deal is accretive if the acquirer's P/E is higher than the P/E paid for the targetCorrect
- C. The deal is accretive if the target has positive net income
- D. The deal is accretive if the acquirer pays a premium below 30%
Takeaway. In all-stock deals, compare the acquirer's P/E with the P/E paid for the target to call accretion or dilution instantly.
