Palm: Is It a Likely Buyout
There were rumors that a Palm Inc. buyout was expected to be finished at a price of $20 or more per share when Palm released the results of its most recent financial quarter. Nokia Corp. is the leading vendor bidder, but Palm management is said to favor a private equity buyer, either Texas Pacific Group or Silver Lake Partners. Motorola Inc., has been reconsidering its position, and may try to block Nokia with its own bid in an effort to get out of its low-price war with Nokia and concentrate on Palm's higher-end Treo 680, and in order to placate activist shareholder Carl Icahn. Palm hired Morgan Stanley to explore its options to close the deal.
However in a twist of events, despite widespread rumors, no bids appear to be forthcoming for Palm. Meanwhile the PDA/smartphone maker, which has been the subject of persistent takeover rumors, reported results that beat Wall Street expectations. Palm executives were asked several times about the rumors, but they declined to comment. Just because there wasn't an official announcement of a company acquiring Palm today doesn't mean that it isn't going to happen.
The lack of an announcement today could simply be an indication that the bidding process is taking longer than some had hoped. At the same time, it could also mean that there is no truth to these rumors at all.
The price of Palm's stock, after steadily rising on speculation of a buy-out, dropped 8.8% percent recently, after Motorola's quarterly financial announcement was released yesterday without word of it acquiring Palm.
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