Further, it’s often applied backwards. Some financial engineering self proclaimed wizard will claim “x+y+z=a and the stock is trading at b, and a>>b, therefore the conglomerate discount is too large so we can earn risk free profit (aka arbitrage) by breaking this company up and publicly listing x,y, and z as independent units”. See: Xerox, for example.
Typically in mergers, you see accretion due to the removal of duplicate functions on the cost side (you don’t need two HR departments for example), but sometimes you get negative credit if you’re a too big / too opaque / too confusing.
Typically in mergers, you see accretion due to the removal of duplicate functions on the cost side (you don’t need two HR departments for example), but sometimes you get negative credit if you’re a too big / too opaque / too confusing.