What type of merger results in an increase in Earnings Per Share for the acquiring company?

An accretive merger occurs when the acquiring company's earnings per share (EPS) increase post-merger. This typically happens when the target company's earnings are higher than the cost of capital for the acquiring company. In a successful accretive merger, the combined earnings of the two companies will lead to a situation where the total earnings divided by the increased number of shares results in a higher EPS than what the acquiring company had prior to the merger.

On the other hand, a dilutive merger would lead to a decrease in EPS because the cost of acquiring the target (in terms of equity or debt) outweighs the earnings contribution from the target. Equity and cash mergers refer to the method of payment but do not inherently define the impact on EPS. Thus, the fundamental aspect that makes an accretive merger noteworthy is its positive effect on the acquiring company’s earnings per share, which is the key characteristic sought in this context.