Accretive or dilutive?

Change how the buyer pays and how much. If the target earns more than the deal costs, EPS goes up.

Buyer EPS

$1.00 → $1.022

2.2% accretive

After-tax cost of what you pay with vs. what the target earns

Cash (lost interest)3.0%

Debt (after-tax rate)6.0%

Stock (1 ÷ buyer P/E)5.0%

Weighted cost of this mix5.5%

Target's earnings yield (its NI ÷ price paid)6.0%

Yield above cost → accretive. Yield below cost → dilutive.

Buyer's P/E20.0x

Price paid (x target earnings)16.7x

Pre-tax synergies$0