HP to buy out Palm for $1.2 billion

The buyout was inevitable, but to the surprise of many, Palm's saviour has turned out to be HP.

The hardware company has agreed a $1.2 billion (0.78 billion) sum for the mobile manufacturer, which has reported major losses in recent months thanks to its Palm Pre and Palm Pixi devices not taking off as hoped.

The acquisition will allow HP to follow in the path of its competitors like Dell and Acer, who are moving into the lucrative smartphone market.

Todd Bradley, executive vice president of the Personal Systems Group (PSG) at HP, said in a statement: "The smartphone market is large, profitable and rapidly growing, and companies that can provide an integrated device and experience command a higher share."

He added: "Advances in mobility are offering significant opportunities, and HP intends to be a leader in this market."

After HTC backed out of a rumoured deal last week, the net was spread wider.

HP confirmed that Jon Rubinstein, chairman and chief executive (CEO) of Palm was likely to stay on with the company once the acquisition goes through.

"We're thrilled by HP's vote of confidence in Palm's technological leadership," he said in a statement.

"We look forward to working with HP to continue to deliver industry-leading mobile experiences to our customers and business partners."