The announcement, which came just after the U.S. stock market closed on Wednesday, follows rumors this week of a number of suitors, including Lenovo and HTC, vying to buy the iconic brand.
(See Related:HP to Buy Palm, Shake Up the Mobile World & HP Buys Palm: Why It’s a Good Deal)
Palm last year released a new operating system, WebOS, that now runs on two phone models. But amid tough competition from Apple’s iPhone and Google’s Android phones, Palm struggled to sell the phones. During its last earnings call, Palm said that it had a large inventory of phones that hadn’t yet sold and so future earnings would be lower than expected.
Some have speculated that HP, whose Windows 7-based Slate tablet is expected sometime this year, could also get an edge in the tablet market with Palm’s WebOS — rather than just putting out Windows-based tablet. Others speculate buying Palm gives HP the ability to compete more squarely with companies such as Apple that build both the hardware and software for its mobile devices.
Palm and HP have scheduled a 2 p.m. Pacific Time conference call to further discuss the deal.
In a prepared statement Todd Bradley, executive vice president, Personal Systems Group for HP said: “Palm’s innovative operating system provides an ideal platform to expand HP’s mobility strategy and create a unique HP experience spanning multiple mobile connected devices… Palm possesses significant IP assets and has a highly skilled team.”
Palm Chairman and Chief Executive Jon Rubinstein said in a prepared statement: “We’re thrilled by HP’s vote of confidence in Palm’s technological leadership, which delivered Palm webOS and iconic products such as the Palm Pre. HP’s longstanding culture of innovation, scale and global operating resources make it the perfect partner to rapidly accelerate the growth of webOS.”
More coverage to follow.
Here is the complete release from HP:
HP to Acquire Palm for $1.2 Billion
Combination will accelerate HP’s growth within the more than $100 billion connected mobile device market
PALO ALTO and SUNNYVALE, Calif., April 28, 2010
HP and Palm, Inc. (NASDAQ: PALM) 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 HP’s global scale and financial strength with Palm’s unparalleled webOS platform will enhance HP’s ability to participate more aggressively in the fast-growing, highly profitable smartphone and connected mobile device markets. Palm’s unique webOS will allow HP to take advantage of features such as true multitasking and always up-to-date information sharing across applications.
“Palm’s innovative operating system provides an ideal platform to expand HP’s mobility strategy and create a unique HP experience spanning multiple mobile connected devices,” said Todd Bradley, executive vice president, Personal Systems Group, HP. “And, 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.”
“We’re thrilled by HP’s vote of confidence in Palm’s technological leadership, which delivered Palm webOS and iconic products such as the Palm Pre. HP’s longstanding culture of innovation, scale and global operating resources make it the perfect partner to rapidly accelerate the growth of webOS,” said Jon Rubinstein, chairman and chief executive officer, Palm. “We look forward to working with HP to continue to deliver industry-leading mobile experiences to our customers and business partners.”
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 Palm’s stockholders. The transaction is expected to close during HP’s third fiscal quarter ending July 31, 2010.
Palm’s current chairman and CEO, Jon Rubinstein, is expected to remain with the company.
(PCWorld’s Tom Spring contributed to this report)