Palm Investors Approve $1.2B Takeover by HP

Palm shareholders reportedly have approved the pending, $1.2 billion takeover by computer-and-printer giant HP.

News broke late Friday that Palm investors accepted the $5.70-per-share-plus-debt deal. Theres also word that Palm CEO Jon Rubinstein will lead HPs new mobility unit; HP had pledged to keep Rubinstein but when the deal was announced in late April, it wasnt known in what capacity. HP is forming the division as it takes on Palm, developer of the webOS mobile operating system. HPs overall strategy is to compete against the iPhone and Droid operating systems, installing webOS in tablet computers and possibly even HPs line of iPAQ smartphones.

The HP-Palm transaction is slated to close by the first week of July. 

For Palm, a deal such as this had to materialize or the California-based company would have faded away. Palm, maker of the Pre and Pixi devices, has seen its market share drop off amid competition from the iPhone, Droid, BlackBerry and other smartphones. And to be sure, the disappearance of Palms devices remains a possibility. HP seems to be buying Palm for WebOS and some IP assets only. The Palm brand is tarnished and probably would weigh down HP more than help it. 

There was no word on the support that will be available for Palm smartphones once the merger closes. And HP surely is contemplating how to avoid another Compaq fiasco. The company suffered cultural clashes and management turmoil after the contentious 2001 merger, which co-founder Walter Hewlett opposed. HP, famously started in a California garage, then fell prey to the slash-and-burn style of CEO Carly Fiorina as she steered the corporation in new directions.

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