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 Market value per share (CHF) 37 Number of shares 2,000,000 9,500,000 Earnings (CHF) 2,100,000 14,800,000 EPS (CHF) 1.05 1.56 Total Market Value (CHF) 74,000,000 275,500,000 35 22 29 EuroPhar wants to acquire SmallPhar. It offers 2,900,000 shares of EuroPhar, with a current market value of CHF84,100,000 and a(n) 13 65% 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? b. Calculate the consolidated earnings after the acquisition. c. If the P/E ratio after the capitalization stays at 22, what would be the new market value of EuroPhar? d. And what would be EuroPhar's new EPS? e. What is the new market price of EuroPhar's share? f. By how much would EuroPhar's stock price increase (decrease)? g. Assume that the market takes a negative view of the acquisition and lowers EuroPhar's P/E ratio to 11. What would be the new market price per share of stock? What would be its percentage loss? BRI 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.) 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 35 Number of shares 2,000,000 9.500,000 Market value per share (CHF) 37 Earnings (CHF) 2,100,000 14,800,000 EPS (CHF) 1.05 1.56 Total Market Value (CHF) 74,000,000 275,500,000 22 29 EuroPhar wants to acquire SmallPhar. It offers 2,900,000 shares of EuroPhar, with a current market value of CHF84,100,000 and a(n) 13.65% 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? b. Calculate the consolidated earnings after the acquisition. c. If the P/E ratio after the capitalization stays at 22, what would be the new market value of EuroPhar? d. And what would be EuroPhar's new EPS? e. What is the new market price of EuroPhar's share? f. By how much would EuroPhar's stock price increase (decrease)? g. Assume that the market takes a negative view of the acquisition and lowers EuroPhar's P/E ratio to 11. What would be the new market price per share of stock? What would be its percentage loss? c. If the P/E ratio after the capitalization stays at 22, what would be the new market value of EuroPhar? M 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 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 P/E ratio (CHF) Company SmallPhar EuroPhar Earnings (CHF) 2,100,000 14,800,000 Number of shares 2,000,000 9,500,000 EPS (CHF) 1.05 1.56 Total Market Value (CHF) 74,000,000 275,500,000 35 37 22 29 EuroPhar wants to acquire SmallPhar. It offers 2,900,000 shares of EuroPhar, with a current market value of CHF84,100,000 and a(n) 13.65% 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? b. Calculate the consolidated earnings after the acquisition. c. If the P/E ratio after the capitalization stays at 22, what would be the new market value of EuroPhar? d. And what would be EuroPhar's new EPS? e. What is the new market price of EuroPhar's share? f. By how much would EuroPhar's stock price increase (decrease)? g. Assume that the market takes a negative view of the acquisition and lowers EuroPhar's P/E ratio to 11. What would be the new market price per share of stock? What would be its percentage loss? e. What is the new market price of EuroPhar's share? The new market price of EuroPhar's share is CHF 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.) 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 PIE ratio 35 22 Number of shares 2,000,000 9,500,000 Market value per share (CHF) 37 29 Earnings (CHF) 2,100,000 14,800,000 EPS (CHF) 1.05 1.56 Total Market Value (CHF) 74,000,000 275,500,000 EuroPhar wants to acquire SmallPhar. It offers 2,900,000 shares of EuroPhar, with a current market value of CHF84,100,000 and a(n) 13.65% 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? b. Calculate the consolidated earnings after the acquisition. c. If the P/E ratio after the capitalization stays at 22, what would be the new market value of EuroPhar? d. And what would be EuroPhar's new EPS? e. What is the new market price of EuroPhar's share? f. By how much would EuroPhar's stock price increase (decrease)? g. Assume that the market takes a negative view of the acquisition and lowers EuroPhar's P/E ratio to 11. What would be the new market price per share of stock? What would be its percentage loss? HDD g. Assume that the market takes a negative view of the acquisition and lowers EuroPhar's P/E ratio to 11. What would be the new market price per share of stock? The new market value of EuroPhar would be CHEI (Round to the nearest integer) The new market price of EuroPhar's share would be CHE per share. (Round to two decimal places ) What would be its percentage loss? The percentage change in EuroPhar's stock price would be % % (Round to two decimal places.)