Hewlett Packard Co. (HPQ), the world’s largest supplier of PCs, announced plans to acquire Palm, Inc. (PALM), a provider of smartphones, for $1.2 billion in cash, or $5.70 per common share and certain preferred shares after the market closed Wednesday. The transaction represents a 23% premium to the co.’s regular session closing price of $4.63 a share.
“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.”
The statements notes that Palm’s chairman and CEO Jon Rubinstein — an ex-Apple (AAPL) exec famous for developing the iPod — is expected to remain with the company.
“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 Rubinstein. ”We look forward to working with HP to continue to deliver industry-leading mobile experiences to our customers and business partners.”
Bank of America (BAC) advised HP on the deal, while Goldman Sachs (GS) advised Palm. The merger, which has been approved by the HP and Palm boards of directors, is expected to be completed during HP’s third fiscal quarter, which ends on July 31, according to a release.
Shares of Palm, 30% owned by Elevation Partners, gained 27% to $5.88 in after-hours trading, above HP’s $5.70 cash offer. HP shares dipped 38 cents to $52.90.