A Palm Time Line
The $325 million deal gives the PE firm 27 percent control of the handheld and smartphone maker -- two percent more than was originally stated -- and prevents Palm from considering any further buyout offers while the purchase is underway. "While the Purchase Agreement is in effect, subject to specified exceptions, we are prohibited from soliciting, initiating, or encouraging any inquiries or proposals that may lead to a proposal or offer for a merger or other business combination transaction," the company says. (See Palm Sells 25% Stake.)
The PDA pioneer also suggests that the deal could put a damper on further third-party M&A offers in the future. "The ownership position and governance rights of Elevation could discourage a third party from proposing a change of control or other strategic transaction concerning Palm," the company notes.
An M&A time line
Palm, however, has been fielding offers since early 2006, the documents reveal. "In the first three quarters of 2006, several potential strategic partners and private equity firms contacted us expressing desire to pursue discussions about a potential business combination transaction," Palm writes. Discussions went no further at that time.
Talks about the future of the company really started in the Fall of 2006, however:
October 5, 2006: Our board of directors met to discuss our market value and to explore ways to enhance stockholder value. The board of directors asked Morgan Stanley, who had been engaged by Palm from time to time in the past, to present an analysis of our market value and to summarize various potential transactions aimed at enhancing stockholder value. Among the various potential transactions discussed by Morgan Stanley were an accelerated stock repurchase, a recapitalization, strategic business combinations and a sale of the company.
In October 2006, Elevation discussed with us its interest in pursing a potential transaction, specifically, a going-private transaction. We entered into a confidentiality agreement with Elevation which contained a two-year 'standstill provision that, among other things, prevented Elevation and their representatives from acquiring our stock or participating in a proxy solicitation with respect to our stock without our consent.
December 6, 2006: The board of directors "discussed ways to enhance stockholder value" and the company prepared an electronic data room to facilitate sharing information with prospective partners. Elevation was provided with access to this data room.
January 2007 - April 2007: We met with several potential strategic partners and private equity firms to discuss a potential business combination transaction. Management made diligence presentations to these potential partners, and afforded access to the electronic data room. We circulated draft definitive agreements to several of the parties engaged in this process who most seriously indicated their interest in pursuing a transaction, and held discussions and negotiations with them regarding potential transactions. (See Palm's in Play , Palm Action Heats Up , and Palm Deal in the Final Stretch.)
Elevation first made an offer to buy out 100 percent of the company on January 22. On March 26, 2007, Elevation and "a separate private equity firm" submitted a joint offer to buy the company for $19-$20 per share. On March 29, 2006, Elevation informed Palm that its private equity partner no longer wished to pursue the deal.
Finally, On April 16, 2007, Elevation proposed the $325 million deal that was accepted by Palm. Under this agreement, Elevation wants to put two of its own on the board if the deal is approved by Palm's shareholders. They are Roger McNamee, who is also a co-founder of Silver Lake Partners , which was initially one of the firms rumored to be interested in buying Palm earlier this year. Former Apple Inc. (Nasdaq: AAPL) CFO Fred Anderson would also get a seat.
Meanwhile, ex-Apple executive Jon Rubinstein will take on the executive chairman role to help manage the company.
The deal is still subject to shareholder approval. The SEC documents say a shareholder meeting is planned but a date hasn't yet been announced.
— Dan Jones, Site Editor, Unstrung