HP to Buy Palm for $1.2B

After weeks of speculation, Palm Inc. 's suitor has been revealed: HP Inc. (NYSE: HPQ) will purchase the handheld pioneer for $1.2 billion in cash.

That amounts to $5.70 per share, as HP said in its announcement late Wednesday. Palm's shares had closed at $4.63, so the buyout price represents a premium of more than 20 percent. The transaction has already been approved by both companies' boards.

HP says the deal will allow it to "participate more aggressively in the fast-growing, highly profitable smartphone and connected mobile device markets." The firm says that Palm's WebOS will give it complex mobile capabilities, such as multitasking, right off the bat.

There have been rumors that Palm has been looking for a buyer for weeks now. HP, however, wasn't generally listed among the favorites to nab the PalmPilot pioneer. Apple Inc. (Nasdaq: AAPL), High Tech Computer Corp. (HTC) (Taiwan: 2498), and Huawei Technologies Co. Ltd. had all been named as potential suitors. (See Huawei Linked to Possible Palm Bid.)

HP actually has a mobile-device line, in the form of Windows Mobile-based PDAs and business handsets under the iPAQ brand. These devices, however, have never really captured the public's imagination in the way that the Apple Inc. (Nasdaq: AAPL) iPhone or Palm Pre have.

HP is also facing more competition from computing rivals in the mobile space than it has previously. In addition to Apple's giant strides into wireless, Dell Technologies (Nasdaq: DELL) has its own Android phones coming to market now. (See AT&T Offers Dell's First US Android & More.) The acquisition is expected to close in the third quarter.

— Dan Jones, Site Editor, Light Reading Mobile