HP Buys Palm, Will Invest Heavily in webOS

On Wednesday, HP and Palm, Inc., the provider of smartphones running under its own webOS mobile platform, jointly announced an agreement under which HP will acquire Palm, at a price of $5.70 per share, or an enterprise value of around $1.2 billion. According to the duo, the transaction has been already approved by the HP and Palm boards of directors. Jon Rubinstein, Palm's current CEO, will remain with the company.

Computer maker HP sees Palm's webOS as a platform that, when coupled with its global scale and financial strength, would be able to push the company in the fast growing smartphone market. Moreover, the webOS operating system is expected to enable HP benefit from features like true multitasking and up-to-date information sharing across applications.

“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,” said Todd Bradley, executive vice president, Personal Systems Group, HP. “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.”

Under the terms of the agreement, Palm shareholders are to receive $5.70 in cash for each share of Palm common stock they hold. The two companies announced that the merger consideration took into account updated guidance delivered by Palm. The purchase is subject to customary closing conditions, domestic and foreign regulatory approvals, and approval of Palm’s stockholders. The pair notes that the transaction should be closed during the third fiscal quarter of HP, which will end on July 31, 2010.

“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 Jon Rubinstein, chairman and chief executive officer, Palm. “We look forward to working with HP to continue to deliver industry-leading mobile experiences to our customers and business partners.”