Dilutive Acquisition
An acquisition that will decrease the acquiring company's EPS. Investopedia Says:
These acquisitions will tend to cause a firm's market price to decline, as they are expected to decrease the company's future earnings. In essence, the price paid by the acquiring firm exceeds its addition to EPS.
As a general rule, a dilutive merger or acquisition occurs when the P/E ratio of the acquiring firm is less than that of the target firm. Related Terms:
Accretion
Accretive Acquisition
Acquisition
Acquisition Loan
Earnings Per Share - EPS
P/E Ratio
Target Firm |