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HP All set to Acquire Palm in a US$1.2 Billion Deal

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Palm logoPALO ALTO and SUNNYVALE, USA – After months of lobbying between several electronic giants, US based multi-national Hewlett Packard decided to acquire Palm, in a deal worth US$1.2 billion, or US$5.7 per share of common stock.

The developer of WebOS has been sailing in troubled waters for the last couple of months and has been looking for partners to bail it out.

Taiwanese smartphone manufacturer HTC was in the lead for Palm buyout, but the smartphone manufacturer backed out last week, deciding to concentrate on its Windows Phone and Google Android line-up instead. After HTC pulled out, Microsoft was rumored to be working on acquiring the troubled smartphone manufacturer, but the deal was eventually finalised by Hewlett Packard.

The HP-Palm deal was finalized over a conference call in which the two companies entered into a definitive agreement under which HP will purchase Palm,  at a price of US$5.70 per share of Palm common stock in cash or an enterprise value of approximately US$1.2 billion. The transaction has been approved by the HP and Palm boards of directors.

It is a win-win proposition for both parties with Palm set to benefit from HP’s financial strength and global penetration in segments far beyond Palm’s smartphones while HP gains control over Palm’s webOS platform, one of the few smartphone platforms that can beat iPhone’s high standards with its true multi-tasking and information sharing across applications.

Speaking on the occasion, Todd Bradley, executive vice president, Personal Systems Group, 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… 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.”

Jon Rubinstein, the present chairman and CEO of Palm, who is expected to remain with the newly formed company, remarked, “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… We look forward to working with HP to continue to deliver industry-leading mobile experiences to our customers and business partners”.

The final merger will take into consideration the updated guidance and other financial information released by Palm and the acquisition will be subjected 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 be finalised during HP’s third fiscal quarter ending July 31st, 2010.

The HP-Palm deal opens up interesting avenues for HP which has decided to put its weight behind the development of webOS, with an increased investment in R&D and sales along with en equal emphasis on building a sustainable eco-system around the WebOS platform. HP is looking for merging webOS into its services and provide a complete cloud-based solution for effective management of data on the mobile platform. Whether HP will kill i’s under-performing Windows Mobile powered iPAQ series and if we will see a webOS powered tablet and/or smartphone from HP remains to be seen.

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By , Chief International Correspondent on May 1st, 2010 GMT +2

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