PHILADELPHIA (MainStreet) -- Accretion can be as simple as two plus two.Company A, with earnings per share (EPS) of 43 cents merges with, combines with or acquires Company B. Company B has an EPS of 22 cents. If the deal results in an EPS total of 65 cents per share (43 + 22), then it is declared to be accretive. Actually, if the combined EPS is anything more than the acquirer's original 43 cents then it is considered accretive, as in resulting in growth. The arithmetic fact is shouted from the rooftops. Company executives brag to the Board of Directors, to the shareholders, to reporters and to analysts. And the general response is oh-so-positive.
|Accretive acquisitions are the desirable option for shareholders, as opposed to dilutive acquisitions.|