« U2 goes 3D, rocks Cannes Film Festival | Main | A Powerful Sound for Social Justice: Music From U2 Gives Contemporary Edge to Episcopal Service »
June 04, 2007
Bono Helps Bail Out Palm
Palm Inc.'s financial future looked a little more secure Monday as private-equity firm Elevation Partners said it will pump US$325 million into the mobile device manufacturer.
In recent months, rumors have swirled that Palm would be acquired by either Motorola Inc. or Nokia Corp. as the company faces increasingly aggressive competition in the smartphone market.
The recapitalization plan will see Elevation take a 25 percent equity stake in Palm, valuing the company at $8.50 per share, a premium of around 16 percent compared with the stock's performance over the last 10 trading days. Elevation is a $1.9 billion private-equity firm and one of its five partners is Bono, the lead singer of Irish rock band U2. The investment in Palm is by far the largest the firm has ever made.
The device maker has also secured $400 million and a $40 million revolving credit facility. Palm will use the proceeds from the sale of its stock and the proceeds from the new debt to fund a $9 per share cash distribution to its shareholders, excluding Elevation. The total amount of money shareholders will receive will be around $940 million. Palm expects the move will leave it with more than $300 million of cash on its balance sheet.
Subject to shareholder approval and other closing conditions, Palm expects to complete the recapitalization in the third quarter of this calendar year.
Once the deal closes, there will also be changes in Palm's board of directors.
Jon Rubinstein, Apple Inc.'s former vice president of hardware engineering and head of its iPod division, will become executive chairman of Palm's board. He will also head up Palm's product development efforts. Besides helping create the iPod music player, Rubinstein had a hand in building the iMac computer. He's seen as instrumental in Apple's successful turnaround, responsible for revamping the company's engineering teams, product road maps and manufacturing processes.
Current Chairman Eric Benhamou and board member D. Scott Mercer will resign from Palm's board and will be replaced by Rubinstein along with Fred Anderson and Roger McNamee, managing directors and co-founders of Elevation. Palm will increase the size of its board from eight to nine members. Anderson was Apple's chief financial officer from 1996 to 2004 and McNamee is a long-time venture capitalist.
The transaction means that Palm will strengthen its leadership team and "create a more effective capital structure," putting it in "a great position to attract new talent, significantly strengthen our execution capabilities, and deliver long-term shareholder value," Ed Colligan, Palm president and CEO, said in a statement.
Along with its handheld devices and Treo smartphones, Palm last week debuted a handheld computer called Foleo, which it calls a smartphone companion device.
Copyright © 2007 PC World Communications, Inc. All rights reserved.
Posted by Jonathan at June 4, 2007 03:23 PM
Comments
Post a comment
Thanks for signing in, . Now you can comment. (sign out)
(If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)