HP to acquire smartphone maker Palm for $1.2bn

Hewlett-Packard (HP), the world's No1 personal computer maker, yesterday agreed to buy Palm Inc., a one-time leading player in the smartphone market, for $1.2 billion in an all-cash deal ending weeks of speculation on the future of the company.

Under the terms of the deal, Palo Alto, California-based HP will pay Palm stockholders $5.70 in cash for each share of Palm common stock, valuing the company at $1.2 billion. The transaction has been approved by the boards of directors of both companies and HP said it expects to close the deal by the end of July.

Sunnyvale, California-based Palm is a maker of smartphones like the Pre and Pixi as well as its groundbreaking webOS mobile operating system.

The company was a pioneer in the smartphone business until it was overshadowed by rivals Nokia, Research In Motion and Apple.

Palm, founded in 1992 by Jeff Hawkins and Donna Dubinsky, was acquired by US Robotics Corp in 1995 and became a subsidiary of 3Com Corporation when US Robotics was acquired by 3Com in 1997.

3Com made Palm an independent and became public traded company in 2000, but competition and the end of the tech bubble caused Palm to lose its popularity in the late 1990s to Apple's iPhone, RIM's Blackberry, Nokia smartphones and, lately, Android handsets.