Palm Shareholders OK $325M Deal With Elevation Partners

By Troy Wolverton, San Jose Mercury News, Calif.

Sep. 12–Palm shareholders today approved the company’s deal with venture capital firm Elevation Partners.

As part of that agreement, Elevation plans to invest some $325 million in Palm and take a 27 percent stake in the struggling handset maker. During Palm’s annual meeting this morning at its Sunnyvale headquarters, investors voted by “a large margin” in favor of the agreement, which also involves a $9 per share cash payout to existing shareholders, Palm officials said. They did not immediately release the vote totals.

Despite the dramatic deal with Elevation, the shareholder meeting was a lightly attended, quiet affair. CEO Ed Colligan fielded just one question from shareholders, which pertained to whether the company expected the recent turmoil in the credit markets to affect its ability to raise the $400 million in debt envisioned by the Elevation agreement.

While that turmoil has made it difficult to close the debt agreement quickly, Colligan said he’s confident in Palm’s ability to close the debt deal.

As part of the deal, which Palm expects to close by the end of November, Elevation will name three new board members: long-time venture capitalist Roger McNamee and former Apple executives Jon Rubinstein and Fred Anderson. Rubinstein will become Palm’s executive chairman.

None of the three attended the meeting.

Palm was an early leader in both the handheld computer and smartphone markets. But the handheld market has since atrophied and the company has had trouble keeping up with competitors such as Research in Motion, Motorola and now Apple in the smartphone market.

Shares of the Treo maker were little changed today. In recent trading following the meeting, Palm’s stock was up a penny, or less than one percent, to $15.01.

Contact Troy Wolverton at (408) 920-5021 or twolverton@mercurynews.com.

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