DOW JONES NEWSWIRES
Hewlett-Packard Co. (HPQ) announced plans to acquire Palm Inc.
(PALM) for nearly $1 billion, ending the scuttlebutt about what
would happen to the once-pioneering smartphone maker.
The company has come onto hard times as others have surpassed
Palm's presence in the sector. Several analysts have even said
recently the company's stock was worth zero.
But H-P is paying $5.70 a share, a 23% premium to Wednesday's
closing price. Including debt, the deal is valued at $1.2 billion.
Palm shares were up 28% to $5.93 in after-hours trading, topping
the offer price and suggesting investors may be looking for a
higher bid.
The computing giant said the deal will allow it to "participate
more aggressively in the fast-growing, highly profitable smartphone
and connected mobile device markets." It also highlighted Palm's
operating system. The deal is expected to close in H-P's fiscal
third quarter, which will end July 31.
Palm Chairman and Chief Executive John Rubinstein is expected to
remain with the company.
H-P shares were down 1.6% after-hours to $52.44.
-By Kevin Kingsbury, Dow Jones Newswires; 212-416-2354;
kevin.kingsbury@dowjones.com