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Palm to be sold for $1.2 billion

It has been announced that Hewlett Packard is to buy the smart phone pioneer, Palm, for $1.2 billion (£657 million).

The US computer giant, HP, said that owning Palm’s webOS operating system would mean it would be able to expand in a more aggressive way in the rapidly-growing market for connected mobile devices and smart phones.

If Palm’s debt is taken into account, the deal that has been agreed values Palm at $1.2 billion. HP will pay $5.70 for each share in Palm and says its hopes the deal will be completed by the end of July.

$5.70 per share is well above Palm’s share price of $4.63 at close of trade on Wednesday, when the deal was announced, but still significantly below the company’s share price high of $18.09.

Palm launched a new touch-screen phone last year. The Pre was well accepted by critics but sales were nevertheless disappointing. Palm was once considered a pioneer in handheld sets but in recent years it has been struggling to compete with Blackberry and Apple, who now dominate the market.

Palm was founded in 1992. It is believed that Dell, a rival of HP, had also been interested in acquiring the company.