In Search of a Takeover, Palm (PALM) Contacts China's Huawei
Struggling smartphone maker Palm Inc. (NASDAQ: PALM) contacted China's Huawei Technologies for preliminary acquisition talks, according to a report from Reuters citing a source familiar with the situation.
The source said that the Huawei was approached in February to discuss a possible acquisition through its investment bank, but the talks have not since moved forward.
"As a matter of policy, Huawei does not comment on speculation about possible mergers or acquisitions. Huawei is always open to consider opportunities that will further enhance its business development," the company said in a statement.
After years of losing ground to rivals Apple Inc. (NASDAQ: AAPL) and Research in Motion Ltd. (NASDAQ: RIMM) in the smartphone market, Palm has reportedly hired bankers to explore several options including a possible sale of the company.
Palm would be a target for a company that is looking to expand in the mobile communication market as the company does have a history of making popular devices and its mobile operating system is one of the highest rated in the industry. But lack of a must have device to compete with the iPhone, Blackerry and Goolge Inc.’s (NASDAQ: GOOG) Android based phones has left Palm behind.
Potential buyers would likely have to pay more than $1 billion for Palm, as it had a market value of $870 million and technology companies are commanding a 30 percent premium on acquisitions at this time.
Over the last half year, Palm's market capitalization has slipped from $2.4 billion and its shares have plummeted 69 percent.
Huawei, along with ZTE Corp. are two potential buyers as they currently don not have an operating system to market to customers. ZTE is China’s No. 2 telecom equipment maker and the addition of Palm would add value to the company that does not have a history of making quality products that carry a the ease of use and functionality that Palm’s devices do.
Other potential buyers rumored to be in the running include, HTPC Corp., Dell Inc. (NASDAQ: DELL), Mircosoft Corp. (NASDAQ: MSFT), Cisco (Nasdaq: CSCO), Nokia Corp. (NYSE: NOK) and Motorola Inc. (NYSE: MOT).
Shares of Palm are 26 cents in premarket trade to $5.78 after rising on the rumors of a sale of the company on Monday.
The source said that the Huawei was approached in February to discuss a possible acquisition through its investment bank, but the talks have not since moved forward.
"As a matter of policy, Huawei does not comment on speculation about possible mergers or acquisitions. Huawei is always open to consider opportunities that will further enhance its business development," the company said in a statement.
After years of losing ground to rivals Apple Inc. (NASDAQ: AAPL) and Research in Motion Ltd. (NASDAQ: RIMM) in the smartphone market, Palm has reportedly hired bankers to explore several options including a possible sale of the company.
Palm would be a target for a company that is looking to expand in the mobile communication market as the company does have a history of making popular devices and its mobile operating system is one of the highest rated in the industry. But lack of a must have device to compete with the iPhone, Blackerry and Goolge Inc.’s (NASDAQ: GOOG) Android based phones has left Palm behind.
Potential buyers would likely have to pay more than $1 billion for Palm, as it had a market value of $870 million and technology companies are commanding a 30 percent premium on acquisitions at this time.
Over the last half year, Palm's market capitalization has slipped from $2.4 billion and its shares have plummeted 69 percent.
Huawei, along with ZTE Corp. are two potential buyers as they currently don not have an operating system to market to customers. ZTE is China’s No. 2 telecom equipment maker and the addition of Palm would add value to the company that does not have a history of making quality products that carry a the ease of use and functionality that Palm’s devices do.
Other potential buyers rumored to be in the running include, HTPC Corp., Dell Inc. (NASDAQ: DELL), Mircosoft Corp. (NASDAQ: MSFT), Cisco (Nasdaq: CSCO), Nokia Corp. (NYSE: NOK) and Motorola Inc. (NYSE: MOT).
Shares of Palm are 26 cents in premarket trade to $5.78 after rising on the rumors of a sale of the company on Monday.
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