Accretion From P/E Arbitrage

This problem practices the core logic of accretion and dilution analysis in an all stock merger, where the key question is whether the buyer is issuing its own shares at a richer valuation than the earnings multiple it is paying for the target. Candidates have to understand how to compare trading multiples, adjust for the acquisition premium, and reason through why a cheaper acquisition multiple relative to the buyer’s own multiple tends to be accretive. Interviewers ask this because it tests fundamental M&A intuition, valuation discipline, and the ability to translate market multiples into transaction impact without getting lost in mechanics.