Palm Inc. said Monday it will sell a 25 percent stake to private equity firm Elevation Partners for $325 million and name former Apple Inc. executive Jon Rubinstein as chairman.
The deal calls for the company to pay $9 per share, or about $940 million, in a special distribution to shareholders. The company said funds from the investment, cash on hand and about $400 million in new debt would go toward that distribution.
The smartphone maker said the deal will leave it with $300 million in cash. Elevation said the investment is its largest ever.
Rubinstein, the former Apple senior vice president of hardware engineering and head of the iPod division, will become chairman of when the deal closes. Elevation managing directors and co-founders Fred Anderson and Roger McNamee also will join the Palm board.
“As a result of this transaction, we will strengthen the Palm leadership team and create a more effective capital structure, which puts us in a great position to attract new talent, significantly strengthen our execution capabilities, and deliver long-term shareholder value,” said Ed Colligan, president and CEO of Palm.
Rubinstein ran Apples iPod division from 2004 to 2006. Anderson was former CFO at Apple and recently paid $3.5 million in fines to the Security and Exchange Commission without admitting any wrongdoing in a stock options probe at Apple.
The Palm transaction is expected to close during the third quarter and faces customary regulation and shareholder approval. The companys stock was up $1.56 at $17.65 about a half hour before the market was set to close on Monday.
Rock star Bono is one of Elevation Partners five partners.
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May 17 2019 @ 15:34:37 UTC