e.Digital Corporation (fka EDIG)

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OT: Palm to acquire Handspring...

http://www.thestreet.com/_tsclsii/tech/marketmovers/10091349.html

Palm to Acquire Handspring in Stock Deal

By TSC Staff
06/04/2003 09:54 AM EDT

Updated from 8:05 a.m. EDT

Consolidation came to the handheld computer market Wednesday, as Palm (PALM:Nasdaq - news - commentary - research - analysis) agreed to acquire rival Handspring (HAND:Nasdaq - news - commentary - research - analysis) in a stock swap.


Palm's board also gave final approval for the spinoff of PalmSource. Under the proposed terms of the transaction, and following the spinoff of PalmSource, Palm will exchange 0.09 shares for each share of Handspring. Palm will issue about 13.9 million shares to Handspring's stockholders. Handspring's holders will own about 32.2% of the merged company, and Palm's shareholders will own 67.8%.

The transaction, encompassing the spinoff of PalmSource and the merger of Handspring with the remaining Palm Solutions Group, is expected to close in the fall.

The value per share that Handspring shareholders will receive will be based on Palm's share price following the spinoff of PalmSource. The spinoff of PalmSource will be completed immediately before the closing of the Handspring acquisition.

Based on Palm's Nasdaq closing price of $12.15 on Tuesday, the deal would be valued at nearly $170 million.

The merged companies expect greater revenue opportunities and cost savings of around $25 million a year. The projected savings assume combined employee reductions of around 125 people and the elimination of overlapping programs and unnecessary real estate. Palm expects to move Handspring's employees to Palm Solutions headquarters in Milpitas, Calif.

As part of the agreement, Palm will provide an initial $10 million line of credit to Handspring for working-capital purposes until the transaction closes. Under certain conditions, the line of credit may increase to $20 million, and its maturity could be extended.

Shares of both companies were higher in morning trading. Palm was gaining 85 cents, or 7%, to $13, and Handspring was up 16 cents, or 14%, to $1.27