Palm and Extended Systems Cancel Merger
Palm and Extended Systems announced today that they have mutually and amicably agreed to terminate their proposed deal for Palm to acquire the mobile infrastructure developer. A proposed acquisition was announced March 6 and was expected to close in June. They cited "the slowing economy and market conditions" as their reasons for cancelling the deal. There will be no termination fee.
Palm was buying Extended Systems with stock but Palm's stock price has collapsed since the deal was first announced.
Palm had originally offered $22 worth of Palm shares for each Extended share, subject to certain restrictions. But one of the restrictions was that if Palm's stock price fell below $16.60, they will instead pay 1.325 shares for each Extended one. In March, Palm stock fell to around $8 so the deal dropped in value from $264 million to about $128 million.
"While this turn of events is disappointing, Palm and Extended Systems agree that this is the right thing to do at this time. Palm will continue to target the enterprise aggressively via leveraged partnerships and alliances with a number of companies, including Extended Systems," said Carl Yankowski, Palm chief executive officer. "We've worked well together in the past, and I expect more of the same to come. We've both come away with a much deeper appreciation of our enterprise customers' needs."
"Extended Systems' commitment to providing a complete mobile computing solution to the enterprise market remains unchanged," said Steve Simpson, Extended Systems CEO. "We will continue to work closely with Palm to offer CIOs tools to deploy mission-critical applications to their mobile work force."
Extended Systems produces software and systems to hook mobile workers into corporate networks, allowing them access company databases and files, use network resources such as printers, and synchronise their contact and agenda data. They also develop Bluetooth- and Infrared-enabling software to let mobile devices communicate with corporate systems.
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