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Last Updated: Wednesday, 4 June, 2003, 16:13 GMT 17:13 UK
Mini-PC giants join forces
Handspring handheld computers
Handspring devices: Joining the Palm stable
Palm has announced plans to buy its closest rival Handspring, in an acquisition which will unite two leading forces in the handheld computer market.

Palm said on Wednesday it had agreed to buy Handspring in an all-shares deal worth about $168.9m (101m ; 135m euros).

The deal is expected to go ahead in the autumn, once Palm has floated its software business PalmSource on the Nasdaq stock market.

News of the acquisition pushed shares in both companies sharply higher, with Palm climbing 8% to $13.15 and Handspring rising 14% to $1.29.

The tie-up comes amid a sharp downturn in sales of handheld computers as blue chip corporations slash their technology budgets.

Dwindling sales

According to market monitors International Data Corp, global sales of handheld devices, or personal digital assistants (PDAs), fell by 21% in the first three months of the year.

Palm and Handspring both turned in a loss in their latest financial quarters, and are expected to lose money again in the next three-month period.

Todd Bradley, chief executive of Palm's PDA unit, described the acquisition as a "merger of leaders," and said it was "the best formula to expand our young, promising markets".

Combining the two companies will lead to about 125 job losses, and will generate about $25m a year in cost savings, Palm said.

Mr Bradley will retain the chief executive role after the deal has been completed.

The acquisition will also reunite Palm with its founders; Handspring chief executive Donna Dubinsky, and its chairman, Jeff Hawkins.

Ms Dubinsky and Mr Hawkins founded Palm in 1992, but left to set up Handspring in 1998.


SEE ALSO:
Computer maker's woes deepen
20 Mar 03  |  Business
Palm shares drop as sales fall
03 Mar 03  |  Business
Handhelds and mobiles converge
22 Dec 02  |  Technology
Handspring loses $24m
15 Apr 02  |  Business


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