Palm, Handspring: United at Last

Handheld maker Palm Inc. (Nasdaq: PALM) has today finally announced plans to acquire rival Handspring Inc. for around $169 million in an all-stock deal -- a little under a year since Unstrung reported that the firms had been talking about a merger (see Palm & Handspring: Will They, Won't They?).

"This is a great day for the Palm Economy," trumpeted David Nagel, president and CEO of Palm's software division, in a statement [ed. note: causing several editors to giggle rather childishly behind their hands].

The merger is expected to close by the fall of this year, with the Palm Solutions unit and Handspring forming a single company focused on hardware development, and the Palm Source software unit being spun off as a separate entity.

With the merger, Palm gains Handspring's Treo smartphone team and a number of important carrier relationships worldwide. Handspring has been far more focused on wireless than Palm and acquiring the company will considerably strengthen Palm's offerings in that area.

Meanwhile, the merger will give Handspring enough money to stay afloat. Palm says it will provide an initial $10 million line of credit to Handspring for working-capital purposes until the transaction closes. Under certain conditions, this line of credit may be increased to $20 million, and its maturity may be extended, the firm says.

Both companies have seen tough times since the economic downturn (see Palm and Handspring: Slowly Drowning).

The move will be a homecoming for Palm veterans Jeff Hawkins and Donna Dubinsky. Hawkins developed the first Palmpilot and founded Palm Inc. with Dubinsky in 1992. The pair left to form Handspring in 1998, after 3Com Corp. (Nasdaq: COMS) acquired the company as part of its U.S. Robotics Corp. deal in 1997.

Eric Benhamou is currently president and CEO of Palm [ed. note: which also causes several editors to giggle rather childishly behind their hands].

— Dan Jones, Senior Editor, Unstrung

Be the first to post a comment regarding this story.
Sign In