IT giant HP will buy struggling US manufacturer Palm for a reported £657m.
HP is hoping Palm's webOS operating system will help it expand more aggressively in the smartphone market.
With Palm's debt included, the deal values the company at $1.2bn.
HP said it hoped to complete the deal by the end of July.
The transaction has been approved by the HP and Palm’s boards of directors. Palm’s current chairman and CEO, Jon Rubinstein, is expected to remain with the company.
HP executive vice president, Personal Systems Group, Todd Bradley, said: ‘Palm’s innovative operating system provides an ideal platform to expand HP’s mobility strategy and create a unique HP experience spanning multiple mobile connected devices.’
‘Palm possesses significant IP assets and has a highly skilled team. The smartphone market is large, profitable and rapidly growing, and companies that can provide an integrated device and experience command a higher share. Advances in mobility are offering significant opportunities, and HP intends to be a leader in this market.’
Jon Rubinstein, chairman and chief executive officer of Palm, said: ‘We’re thrilled by HP’s vote of confidence in Palm’s technological leadership, which delivered Palm webOS and iconic products such as the Palm Pre.
‘HP’s longstanding culture of innovation, scale and global operating resources make it the perfect partner to rapidly accelerate the growth of webOS. We look forward to working with HP to continue to deliver industry-leading mobile experiences to our customers and business partners.’
Palm, which launched the Pre handset late last year on O2, has been struggling to compete in the UK market dominated by bigger brands such as Apple and RIM
It shipped a total of 960,000 smartphones in the February quarter, but only 408,000 of those were sold to consumers. Palm last reported an annual profit for the year ended May 2007.