While there was no secret that Palm's (PALM) private equity investors wanted to unload the company, the betting was that the buyers would come from a tech operator in China, like Lenovo. But in the M&A world, deals can get interesting.
So in a surprise move, Hewlett-Packard (HPQ) has agreed to shell out $1.2 billion for Palm in an all-cash deal, which should make the private equity investors happy.
On a strategic level, the real value is the mobile operating system, called webOS. Essentially, this allows for smartphone capabilities, which will certainly be critical for HP as it gets more aggressive with its mobile efforts. Building such technology is no easy feat, especially for a large company.
It's really too early to say whether this move will make RIMM (RIMM) and Apple (AAPL) worry. But, it definitely notches up the competitive environment in light of HP's brand and extensive distribution footprint.
HP's executive vice president, Todd Bradley, will lead the Palm deal. As the former CEO of Palm, he should understand the issues very well.
Hewlett-Packard Grabs Palm for $1.2 Billion