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Palm to buy Handspring in $169m deal
Palm, the maker of handheld computers and smartphones, on Wednesday said it would acquire rival Handspring in an all-stock deal valued at $168.9m.

At the same time, the company announced that it would spin off its PalmSource subsidiary, which develops and licences the Palm's operating system.

Palm is to issue 13.9m shares in the transaction, exchanging 0.09 Palm shares for each outstanding Handspring share. This values Handspring shares at $1.09 each, lower than the $1.11 price the shares closed at on Tuesday.

Palm said it expected the deal to lead to $25m in annual cost savings, and would lead to the elimination of 125 jobs. Handspring employees are to move to Palm's headquarters in California, and the company is to be renamed later in the year.

The spin-off of PalmSource and the acquisition of Handspring are expected to be completed by the autumn.