Hewlett Packard is buying Palm for $1.2 billion, the company announced today.
HP is paying $5.70 per share for Palm, a 23% premium over today's close. Palm's stock was trading as high as $18 in the last year.
Analysis here: "Why HP is buying Palm and why it will fail."
HP will be spending nearly $1 billion in cash. According to data from Capital IQ, HP has $13.6 billion in cash and short term investments. The deal will close in the fiscal third quarter, which ends July 31 2010.
Palm has been on the block for the better part of the year.
Palm built a nice operating system in WebOS, but it failed to catch on. Palm's market share in the smartphone world has been shrinking.
Google's Android operating system passed Palm earlier this year in the US, according to comScore data. Palm is in last place.
Todd Bradley, who is HP EVP of the group that will oversee Palm, was once CEO of Palm.
In the release announcing the deal, HP says Palm CEO and chairman Jon Rubinstein is expected to stay with the company.
Palm's attempted resurgence was backed by Elevation Partners who put a lot of money into the company. Dan Primack of PEHub just tweeted, "Back of envelope math shows Elevation would get $485m from HP/Palm deal. Compared to $460m in. Not even a single, but certainly a save"
HP explains the purchase in its release, saying Palm provides "an ideal platform to expand HP’s mobility strategy and create a unique HP experience spanning multiple mobile connected devices."
It adds, "Palm possesses significant IP assets and has a highly skilled team."
Our first take: Look out for the HP tablet running on Palm's OS.
See Also: Meet The iPad Rivals
