An acquisition is accretive when the buyer’s pro forma earnings per share, or EPS, exceeds its standalone EPS. It is dilutive when pro forma EPS is lower. At breakeven, the two are equal.
The governing equation is simple: pro forma net income divided by pro forma diluted shares outstanding must equal the buyer’s standalone net income divided by its standalone diluted shares. That equality is the anchor. From there, determine whether the deal changes the numerator, the denominator, or both.