How does an increase in the acquirer's share price affect the accrotion of an all-stock deal?

In an all-stock deal, the acquirer uses its own shares as the currency for the transaction. If the acquirer's share price increases, it means that each individual share is worth more. Consequently, the acquirer can use a smaller number of its shares to meet the total value of the target's equity being acquired.

This dynamic is significant because it directly impacts the dilution experienced by existing shareholders. When the share price rises, issuing fewer shares to finance the acquisition minimizes the dilution effect. As a result, existing shareholders retain a larger percentage of the company post-transaction than they would if the share price were lower, making the increase in share price advantageous for them.

Other options don't effectively capture the relationship. Increased share price does not directly lead to greater dilution (which is the opposite of what happens), nor does it necessitate cash payments or indicate that the deal remains unaffected. The correct interpretation focuses on the reduced number of shares needed for the acquisition, confirming the positive outcomes associated with a higher share price in an all-stock transaction.