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HP enters smartphone market after buying Palm for $1.2bn

HEWLETT-PACKARD (HP) has struck a $1.2bn (£789m) deal to buy Palm, offering a 23 per cent premium to expand into the smartphone market.

The news comes after rising speculation on who would buy Palm, which once dominated the market but recently has been overshadowed by Apple iPhone, Research in Motion’s BlackBerry and phones that use Google’s Android software.

In a sign of Palm’s struggles, the company yesterday slashed expectations for the current quarter, saying slow sales of its products have resulted in low order volumes from phone carriers.

Under the deal approved by the two companies’ boards of directors, HP will pay $5.70 cash per share of Palm, a 23 per cent premium to its closing price yesterday of $4.63.