US computer giant Hewlett-Packard, in a bid to become a player in the fast-growing smartphone market, is to buy struggling US mobile phone maker Palm for $1.2 billion.
HP and Palm said Palm stockholders will receive $5.70 in cash for each share of Palm share they hold at the closing of the merger, a premium of 23% over Palm's closing price last night in New York.
'The smartphone market is large, profitable and rapidly growing, and companies that can provide an integrated device and experience command a higher share,' HP executive vice president Todd Bradley said.
'Advances in mobility are offering significant opportunities, and HP intends to be a leader in this market,' he added. He said that the 'smartphone market is over $100 billion and growing over 20% annually.'
Apple released its own tablet computer, the iPad, this month and has reported strong sales of the touchscreen multi-media device.
HP currently has a small presence in the mobile phone market with a device called the HP iPaq which runs on Microsoft's Windows Mobile operating system.
HP and Palm said that the acquisition has been approved by the boards of directors of both firms and was expected to close during HP's fiscal quarter ending July 31, 2010.
Palm's touchscreen Palm Pre smartphone won 'Best in Show' at the annual gadget fair in Las Vegas in January of last year, but posted disappointing sales.
The California-based Palm has been the subject of acquisition rumors for months. The takeover speculation heightened after Palm reported a third-quarter net loss of $22m last month, nearly doubling its loss of the previous quarter.
Palm came out with some of the first personal digital assistants in the 1990s, but in recent years has been lagging behind rivals Nokia, Apple and Research in Motion.
