Why is an accretive deal not necessarily value-creating, and what's the trap with EPS accretion?

EPS accretion just means pro-forma EPS rises — it's an arithmetic outcome, not a measure of value. A deal is accretive whenever the acquirer's 'cost' of the consideration is cheaper than the target's earnings yield: e.g., a high-P/E acquirer buying a low-P/E target with stock, or an all-cash/debt deal where the after-tax cost of debt is below the target's earnings yield (the inverse of its P/E). But you can make almost any deal accretive by funding it cheaply (debt) without creating any real value — you've just levered up and arbitraged the P/E gap. The trap: accretion can rise even if you overpay or the target is low-quality/declining, because it ignores the riskiness and growth of the acquired earnings, the synergies actually required, integration risk, and the increased leverage. Value creation requires the return on the investment to exceed the risk-adjusted cost of capital — i.e., paying less than the target is worth and realizing synergies — which accretion doesn't test. So accretion is necessary-ish for sentiment but never sufficient for value.