Press Release: HP and Palm, Inc. today announced that they have entered into a definitive agreement under which HP will purchase Palm, a provider of smartphones powered by the Palm webOS mobile operating system, at a price of $5.70 per share of Palm common stock in cash or an enterprise value of approximately $1.2 billion. The transaction has been approved by the HP and Palm boards of directors.
The combination of HPâ€™s global scale and financial strength with Palmâ€™s unparalleled webOS platform will enhance HPâ€™s ability to participate more aggressively in the fast-growing, highly profitable smartphone and connected mobile device markets. Palmâ€™s unique webOS will allow HP to take advantage of features such as true multitasking and always up-to-date information sharing across applications.
â€œPalmâ€™s innovative operating system provides an ideal platform to expand HPâ€™s mobility strategy and create a unique HP experience spanning multiple mobile connected devices,â€ said Todd Bradley, executive vice president, Personal Systems Group, HP. â€œAnd, Palm possesses significant IP assets and has a highly skilled team. The smartphone market is large, profitable and rapidly growing, and companies that can provide an integrated device and experience command a higher share. Advances in mobility are offering significant opportunities, and HP intends to be a leader in this market.â€
â€œWeâ€™re thrilled by HPâ€™s vote of confidence in Palmâ€™s technological leadership, which delivered Palm webOS and iconic products such as the Palm Pre. HPâ€™s longstanding culture of innovation, scale and global operating resources make it the perfect partner to rapidly accelerate the growth of webOS,â€ said Jon Rubinstein, chairman and chief executive officer, Palm. â€œWe look forward to working with HP to continue to deliver industry-leading mobile experiences to our customers and business partners.â€
Under the terms of the merger agreement, Palm stockholders will receive $5.70 in cash for each share of Palm common stock that they hold at the closing of the merger. The merger consideration takes into account the updated guidance and other financial information being released by Palm this afternoon. The acquisition is subject to customary closing conditions, including the receipt of domestic and foreign regulatory approvals and the approval of Palmâ€™s stockholders. The transaction is expected to close during HPâ€™s third fiscal quarter ending July 31, 2010.
Palmâ€™s current chairman and CEO, Jon Rubinstein, is expected to remain with the company.
Of all the companies that were posited as possible suitors, HP has never been high on the list. HP has long been a Windows Mobile licensee, and has recently dabbled in Android. They are also a confirmed Windows Phone 7 OEM. The details above appear to indicate that Palm will continue to run largely independently, which may limit the synergies Palm can extract from the union.
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