HP buying Palm for $1.2 billion

Hewlett-Packard will purchase Palm for $1.2 billion, the companies announced Wednesday.

That works out to $5.70 per share for the company that invented the PDA and was instrumental in kicking off the smartphone craze. That's a 23 percent premium over the Wednesday closing price on Palm's stock of $4.63. The deal has been approved by both companies' boards of directors and is expected to close by the end of July. 

Rumors began to fly that Palm was headed for a sale after its most recent dismal quarterly earnings report showed the company had yet to gain any real momentum for its Palm Pre and Palm Pixi phones. Palm had hoped that the new hardware along with its new WebOS mobile operating system would help turn the company around.

Though Lenovo and HTC emerged early on as potential suitors, neither appeared as in need of a mobile strategy as HP. HP currently offers one basic messaging phone, but it's packaged mostly with laptops and workstations that HP sells to large corporate clients. Most of HP's rivals in the PC world have developed smartphones intended to compete with Nokia and Apple. Snapping up Palm gives HP an instant presence in the market.

HP is holding a call with investors regarding the sale at 2 p.m. PDT, so we'll update after that

source:cnet