Hewlett-Packard will acquire struggling smartphone maker Palm in a $1.2 billion-deal, which will strengthen the technology major's presence in various mobile connected device markets.
The US-based Palm, which is present in India, put itself up for sale, mainly on account of lukewarm response for its new offerings.
Hewlett-Packard (HP) yesterday said it has entered into a definitive agreement with Palm, to acquire the smartphone maker in a deal having an enterprise value of $1.2 billion.
HP would offer a price of $5.70 per share of Palm common stock in cash and the transaction has been approved by the boards of director of both companies.
Palm's offerings include and Treo 680 smartphones.
In a statement, HP said the combination with Palm's webOS platform would enhance the company's ability to more aggressively participate in the fast-growing, highly profitable smartphone and connected mobile device markets.
"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, HP's executive vice president (Personal Systems Group) said.
Moreover, the deal would give the technology major access to Palm's significant intellectual property assets.
The transaction is expected to close during HP's third fiscal quarter ending July 31, 2010.
As part of the deal, shareholders of Palm would receive $5.70 in cash for each share of Palm common stock that they hold at the closing of the merger.
Palm's current chairman and CEO Jon Rubinstein is expected to remain with the company.
In recent times, Palm has been finding it difficult to compete in the smartphone market with Apple and Research in Motion (RIM), among others. Apple's iPhone and Canada-based RIM's Blackberry have good market share.
Palm had reported a loss of $22 million for the three months ended February 28, 2010.
