SUMMARY:  HP announced that it will acquire Palm for $5.70/share or a premium of about 23% above today’s closing price of $4.63.  This represents an enterprise value of about $1.2B or a valuation of approximately 1.0x trailing EV/Sales.  The deal has been approved by HP and Palm boards of directors and is expected to close during HP’s Q3 ending July 31, 2010.

This effectively revitalizes Palm into a new smartphone competitor that is well capitalized and has a global reach.  That said, both HP and Palm have struggled for many years to capture a significant share of the smartphone market (HP with it’s iPAQ line running Windows Mobile, and Palm with its Treo WinMo and Pre WebOS based phones).