Palm gets bailout from Bono's private-equity firm

A private-equity firm is to take a 25 percent stake in ailing mobile device manufacturer Palm

Palm's financial future looked a little more secure Monday as private-equity firm Elevation Partners said it will pump US$325 million into the mobile device manufacturer.

In recent months, rumors have swirled that Palm would be acquired by either Motorola or Nokia as the company faces increasingly aggressive competition in the smartphone market.

The recapitalization plan will see Elevation take a 25 percent equity stake in Palm, valuing the company at US$8.50 per share, a premium of around 16 percent compared with the stock's performance over the last 10 trading days. Elevation is a US$1.9 billion private-equity firm and one of its five partners is Bono, the lead singer of Irish rock band U2. The investment in Palm is by far the largest the firm has ever made.

The device maker has also secured US$400 million and a US$40 million revolving credit facility. Palm will use the proceeds from the sale of its stock and the proceeds from the new debt to fund a US$9 per share cash distribution to its shareholders, excluding Elevation. The total amount of money shareholders will receive will be around US$940 million. Palm expects the move will leave it with more than US$300 million of cash on its balance sheet.

Subject to shareholder approval and other closing conditions, Palm expects to complete the recapitalization in the third quarter of this calendar year.

Once the deal closes, there will also be changes in Palm's board of directors.

Jon Rubinstein, Apple's former vice president of hardware engineering and head of its iPod division, will become executive chairman of Palm's board. He will also head up Palm's product development efforts. Besides helping create the iPod music player, Rubinstein had a hand in building the iMac computer. He's seen as instrumental in Apple's successful turnaround, responsible for revamping the company's engineering teams, product road maps and manufacturing processes.

Current Chairman Eric Benhamou and board member D. Scott Mercer will resign from Palm's board and will be replaced by Rubinstein along with Fred Anderson and Roger McNamee, managing directors and co-founders of Elevation. Palm will increase the size of its board from eight to nine members. Anderson was Apple's chief financial officer from 1996 to 2004 and McNamee is a long-time venture capitalist.

The transaction means that Palm will strengthen its leadership team and "create a more effective capital structure," putting it in "a great position to attract new talent, significantly strengthen our execution capabilities, and deliver long-term shareholder value," Ed Colligan, Palm president and CEO, said in a statement.

Along with its handheld devices and Treo smartphones, Palm last week debuted a handheld computer called Foleo, which it calls a smartphone companion device.

Join the PC World newsletter!

Error: Please check your email address.

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

China Martens

IDG News Service
Show Comments

Essentials

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

Lexar® Professional 1800x microSDHC™/microSDXC™ UHS-II cards 

Learn more >

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

Learn more >

HD Pan/Tilt Wi-Fi Camera with Night Vision NC450

Learn more >

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?