Pharma Acquisitions. The price/earnings ratio (P/E) is one of the tools used to compare companies in the same sector. A high P/E ratio means that investors pay more for each Swiss franc of net income, especially if they believe that it has future potential. Due to high research and development expenses incurred by pharmaceutical firms, their P/E is usually higher than those of other industries SmallPhar and EuroPhar are hypothetical pharmaceutical firms registered on the Swiss Exchange in Zurich EuroPhar is considering acquiring SmallPhar to take advantage of its future growth and potential new drug production. The following table summarizes the financial situation of both firms. (Click on the icon to import the table into a spreadsheet) P/E ratio Company SmallPhar EuroPhar Market value per share (CHF) 35.89 26.73 Number of shares 1,800,000 10,100,000 Earnings (CHF) 1,900,000 15,000,000 EPS (CHF) 1.06 1.49 Total Market Value (CHF) 64,602,000 269,973,000 34 18 EuroPhar wants to acquire SmallPhar. It offers 2,900,000 shares of EuroPhar, with a current market value of CHF77,517,000 and a(n) 19.99% premium on SmallPhar's shares, for all of SmallPhar's shares. a. What is the total number of outstanding shares that EuroPhar will have after acquiring SmallPhar? The total number of outstanding shares will be (Round to the nearest integer.) b. Calculate the consolidated earnings after the acquisition. The consolidated earnings after the acquisition will be CHF (Round to the nearest integer.) c. If the P/E ratio after the capitalization stays at 18, what would be the new market value of EuroPhar? The new market value of EuroPhar would be CHF. (Round to the nearest integer.) d. And what would be EuroPhar's new EPS? EuroPhar's new EPS would be CHF per share. (Round to two decimal places.) Pharma Acquisitions. The price/earnings ratio (P/E) is one of the tools used to compare companies in the same sector. A high P/E ratio means that investors pay more for each Swiss franc of net income, especially if they believe that it has future potential. Due to high research and development expenses incurred by pharmaceutical firms, their P/E is usually higher than those of other industries. SmallPhar and EuroPhar are hypothetical pharmaceutical firms registered on the Swiss Exchange in Zurich EuroPhar is considering acquiring SmallPhar to take advantage of its future growth and potential new drug production. The following table summarizes the financial situation of both firms. (Click on the icon to import the table into a spreadsheet ) Company SmallPhar EuroPhar P/E ratio 34 Number of shares 1,800,000 10,100 000 Market value per share (CHF) 35.89 26.73 Earnings (CHF) 1,900,000 15 000 000 EPS (CHF) 1.06 1.49 Total Market Value (CHF) 64,602,000 269,973,000 18 EuroPhar wants to acquire SmallPhar. It offers 2,900,000 shares of EuroPhar, with a current market value of CHF77,517,000 and a(n) 19.99% premium on SmallPhar's shares, for all of SmallPhar's shares e. What is the new market price of EuroPhar's share? The new market price of EuroPhar's share is CHE per share. (Round to two decimal places ) f. By how much would EuroPhar's stock price increase (decrease)? The change in EuroPhar's stock price would be CHF per share. (Round to two decimal places.) The percentage change in EuroPhar's stock price would be % (Round to two decimal places.) g. Assume that the market takes a negative view of the acquisition and lowers EuroPhar's P/E ratio to 10. What would be the new market price per share of stock? The new market value of EuroPhar would be CHF] (Round to the nearest integer) The new market price of EuroPhar's share would be CHF per share. (Round to two decimal places) What would be its percentage loss? Pharma Acquisitions. The pricelearnings ratio (P/E) is one of the tools used to compare companies in the same sector. A high P/E ratio means that investors pay more for each Swiss franc of net income, especially if they believe that it has future potential. Due to high research and development expenses incurred by pharmaceutical firms, their P/E is usually higher than those of other industries SmallPhar and EuroPhar are hypothetical pharmaceutical firms registered on the Swiss Exchange in Zurich EuroPhar is considering acquiring SmallPhar to take advantage of its future growth and potential new drug production. The following table summarizes the financial situation of both firms: (Click on the icon to import the table into a spreadsheet.) Market value per share Company SmallPhar EuroPhar PIE ratio 34 18 Number of shares 1,800,000 10,100,000 (CHF) 35.89 26.73 Earnings (CHF) 1.900.000 15.000.000 EPS (CHF) 1.06 1.49 Total Market Value (CHF) 64,602,000 269,973,000 EuroPhar wants to acquire SmallPhar. It offers 2,900,000 shares of EuroPhar, with a current market value of CHF77,517,000 and a(n) 19.99% premium on SmallPhar's shares, for all of SmallPhar's shares RISE The percentage change in EuroPhar's stock price would be %. (Round to two decimal places.) h. Assume that EuroPhar had to lower its earnings to CHF10,100,000 from the previously reported CHF15,000,000 and its market value per share drops to CHF18.00. What might be its new market value prior to the acquisition? Could it still do the acquisition? The new market value of EuroPhar would be CHF (Round to the nearest integer.) Could it still do the acquisition? The minimum number of shares that EuroPhar needs to offer SmallPhar is (Round to the nearest integer) Pharma Acquisitions. The price/earnings ratio (P/E) is one of the tools used to compare companies in the same sector. A high P/E ratio means that investors pay more for each Swiss franc of net income, especially if they believe that it has future potential. Due to high research and development expenses incurred by pharmaceutical firms, their P/E is usually higher than those of other industries SmallPhar and EuroPhar are hypothetical pharmaceutical firms registered on the Swiss Exchange in Zurich EuroPhar is considering acquiring SmallPhar to take advantage of its future growth and potential new drug production. The following table summarizes the financial situation of both firms: (Click on the o icon to import the table into a spreadsheet) Market value per share Company SmallPhar EuroPhar PIE ratio 34 Number of shares 1,800,000 10,100,000 (CHF) 35.89 26.73 Earnings (CHF) 1,900,000 15,000,000 EPS (CHF) 1.06 Total Market Value (CHF) 64,602,000 269,973,000 18 1.49 EuroPhar wants to acquire SmallPhar. It offers 2,900,000 shares of EuroPhar, with a current market value of CHF77,517,000 and a(n) 19.99% premium on SmallPhar's shares, for all of SmallPhar's shares. CE h. Assume that EuroPhar had to lower its earnings to CHF10,100,000 from the previously reported CHF15,000,000 and its market value per share drops to CHF 18.00. What might be its new market value prior to the acquisition? Could it still do the acquisition? The new market value of EuroPharwould be CHE (Round to the nearest integer.) Could it still do the acquisition? The minimum number of shares that EuroPhar needs to offer SmallPhar is (Round to the nearest integer.) (Select the best choice below.) O A. The acquistion can still take place, provided that EuroPhar offers SmallPhar at least 3,531,330 shares. B. The acquistion can still take place, provided that EuroPhar offers SmallPhar at least 4,306,500 shares. O C. The acquistion can still take place, provided that EuroPhar offers SmallPhar at least 3,918,915 shares. OD. The acquistion cannot still take place