Elevation Buys Stake in Palm
By Sarah Jane Tribble, San Jose Mercury News, Calif.
Jun. 4–The beleaguered Sunnyvale smart-phone maker Palm agreed today to sell a 25 percent stake to private equity firm Elevation Partners.
The move is expected to help Palm, which has struggled to keep up with the booming mobile phone market, form a recapitalization plan that will lift it out of the doldrums and position it for growth.
Shareholders will receive a $9 per share cash distribution and Elevation will invest $325 million in Palm. The company will utilize these proceeds along with existing cash and $400 million of new debt to finance the cash distribution.
Along with the deal, Elevation Partners has instigated a few high-profile management shifts:
(box) Jon Rubinstein, former senior vice president of hardware engineering and head of the iPod division at Apple, will join Palm as executive chairman of the board.
(box) Fred Anderson and Roger McNamee, managing directors and co-founders of Elevation, will join Palm’s board of directors upon closing of the transaction.
(box) Rubinstein, Anderson and McNamee will replace Eric Benhamou and D. Scott Mercer, who will resign from Palm’s board of directors at that time.
(box) And the total number of directors on the board will be increased from eight to nine in connection with the transaction.
“This is by far the largest investment that Elevation has ever made, which reflects our enthusiasm for Palm and its opportunity. This investment fits perfectly with Elevation’s investment strategy of partnering with great management teams to transform businesses in industries with dynamic technology change,” McNamee said in a release this morning. “We see Palm as uniquely positioned to deliver the integrated software and hardware solutions that will drive the next generation of mobile computing.”
Contact Sarah Jane Tribble at stribble@mercurynews.com or (408) 278-3499.
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