H-P to Buy Palm for $1.2 Billion
April 28, 2010, 4:13 pm
4:25 p.m. | Updated
Hewlett-Packard said on Wednesday it would acquire Palm, the struggling cellphone maker, for $1.2 billion in cash, including the assumption of debt.
Palm had begun exploring a sale as it has continued to struggle in the marketplace. While the company has won acclaim for webOS, its new smartphone operating system, its new products like the Pre and the Pixi have failed to draw customers away from rivals like Apple and Research in Motion.
Now computer makers like H-P and Dell are seeking to make bigger inroads into the smartphone market. H-P said in its press release that it plans to use webOS to bolster its future offerings in the space.
“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,” Todd Bradley, executive vice president of H-P’s personal systems group, said in a statement. “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.”
In H-P, Palm will have a technological partner who can support the beleaguered company. The firm took a $325 million investment in 2007 from Elevation Partners, a private equity firm.
“We’re thrilled by H-P’s vote of confidence in Palm’s technological leadership, which delivered Palm webOS and iconic products such as the Palm Pre,” Jon Rubenstein, Palm’s chairman and chief executive, said in a statement. “H-P’s longstanding culture of innovation, scale and global operating resources make it the perfect partner to rapidly accelerate the growth of webOS.”
Under the terms of the deal, H-P will pay $5.70 per Palm share, a 23 percent to Wednesday’s closing price of $4.63. Shares in Palm have fallen 52 percent over the past 12 months.
Analysts had speculated that potential buyers could include Lenovo of China and HTC of Taiwan.
Palm had hired Goldman Sachs and Qatalyst Partners, the boutique investment bank started by Frank Quattrone, The New York Times and others previously reported.
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