HP says to buy Palm for $1.2 billion

Hewlett-Packard Co said it has struck a deal to buy Palm Inc for $1.2 billion, offering a 23 percent premium to expand into the smartphone market.

The news comes after much speculation on Wall Street about the future of Palm, which once dominated the market but which has been overshadowed by rivals like Apple Inc's iPhone or Research in Motion's (Toronto:RIM.TO - News) BlackBerry.

Under the deal approved by the two companies' boards of directors, HP will pay $5.70 cash per share of Palm, a 23 percent premium to its closing price on Wednesday of $4.63.

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