HP-Palm Merger
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Case Code: BSTR383 Case Length: 27 Pages Period: 2009-2010 Pub Date: 2011 Teaching Note: Not Available |
Price: Rs.500 Organization: Hewlett-Packard, Palm, Inc. Industry: Information Technology, Electronics Countries: Global; US Themes: Strategic Options , Mergers and Acquisitions |
Abstract Case Intro 1 Case Intro 2 Excerpts
"This is either the end of Palm, or the restart it always needed. Either way, it's probably the iconic brand's last chance for survival - and Hewlett Packard's best chance for mobile relevance."
- Jon Fortt, Senior Writer, Fortune Magazine, in 2010.
"I believe that HP has been very frustrated at trying to sell hardware using somebody else's OS and competing on low margins and not having control over the end-user experience... The Palm acquisition has the potential to rejuvenate HP's smartphone business by giving it control over both the hardware and the software of the end product and offering that same kind of control over future slate products."
- Frank Gillett, Analyst, Forrester Research Inc., in 2010.
Introduction
On July 1, 2010, US-based technology giant Hewlett-Packard Company (HP) announced that it had completed the process of acquiring the US-based Palm Inc. (Palm), considered the pioneer of PDAs. By way of this acquisition, HP attained webOS, a software platform designed and developed by Palm and also Palm's Pre and Pixi lines of smartphones. Todd Bradley (Bradley), Executive Vice President, Personal Systems Group, HP, said, "With webOS, HP will deliver its customers a unique and compelling experience across smartphones and other mobility products...This allows us the opportunity to fully engage in growing our smartphone family offering and the footprint of webOS."
Jon Rubinstein (Rubinstein), Chairman and CEO, Palm, said, "With HP's full backing and global strengths, I'm confident that webOS will be able to reach its full potential... This agreement will accelerate the development of this incredible platform with new resources, scale, and support from a world-respected brand."
On April 28, 2010, it was first made public that an agreement had been drawn up between HP and Palm, under which HP would acquire the latter as a subsidiary of its Personal Systems Group. HP paid a consideration of US$5.70 in cash per ordinary share that Palm held, a price pegged at a premium of 22.58 percent of the closing price of the share as on April 27, 2010.
As part of the acquisition, HP also took up Palm's series B and C convertible preferred stock at US$1010 and US$1753.85 respectively. In an email to his team immediately after the HP-Palm merger announcement, Rubinstein wrote, "I am very excited about the potential of this merger (and not only because I started my career there). HP recognizes the value in our platform, our IP, and our people, and that is all a result of your hard work."...
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