Long-suffering smartphone maker Palm finally may have found a financial savior.
Hewlett-Packard, the world's second-largest IT systems provider, announced in a teleconference April 28 that it has agreed to purchase the struggling smartphone maker for $1.2 billion in cash on hand, or about $5.70 per share.
The offered purchase price amounts to about a 23 percent premium on the current Palm stock price.
Palm's shares were halted at $4.63 on April 28. HP's shares slipped to $52.25, down $1.03, or 2 percent, in after-hours trading.
An HP spokesperson said that Palm's current chairman and CEO, Jon Rubinstein, is expected to remain with the company. HP also said that it expects the acquisition to close during its third fiscal quarter ending July 31.
Palm, which makes the Palm Pre and other connected phones, has been struggling financially for most of the last decade.
The company has invested a great deal of time and capital in its WebOS and the Palm Pre and Pixi, but it hasn't been able to compete well with Apple's iPhone and a flood of Android devices from several makers.
Palm sold only 408,000 phones last quarter; in contrast, Apple sold 8.7 million iPhones during the same time period.
Smartphones a $100 billion market -- and growing
Todd Bradley, executive vice-president of HP's Personal Systems group and a former executive at Palm Inc., told a webcast audience April 28 that HP sees not only a $100 billion [and growing by 20 percent per year] smartphone market to tackle, but new opportunities for business making "additional connected mobile form factors."
"We anticipate that with the WebOS [Palm's proprietary mobile operating system], we'll be able to aggressive deploy an integrated platform that will allow HP to own the entire customer experience, to nurture and grow the developer community, and provide a rich media experience for our customers."