When discussing the advantages and disadvantages of an acquisition, professionals frequently discuss the impact of the deal on the buyer's earnings per share (eps). An attainment is declared as "accretive" if the buyer's eps climbs up post-deal; it is "dilutive" if the buyer's eps declines.
This case describes why managers are anxious with accretion and dilution; the way to tell if a price is accretive; why high P-E buyers can pay a premium and still have an accretive price; how accretive deals can be bad (and dilutive deals good); and how much accumulation or strength to anticipate based on the terms of a deal.
PUBLICATION DATE: October 18, 2007 PRODUCT #: 208059-HCB-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
Related Case Solutions & Analyses:
Strategic Performance Measurement of Suppliers at HTC
Dragon Soup and Earnings Management (A)
China: To Float or Not To Float (D): Bank of Americans Strategic Investment in China Construction Bank
Sun Microsystems Inc.–1987 (B)
Campbell Soup Co.
From Dell to Lenovo? Investment Decision in the Rapidly Changing PC Industry
WL Ross and Plascar
Groupe Eurotunnel S.A. (B): Restructuring Under the Procedure de Sauvegarde
Pension Plan of Bethlehem Steel–2001
Grantham, Mayo, Van Otterloo & Co.–2001
