quest to acquire Handspring
and then split itself into two companies got a vote of confidence Friday from and independent proxy advisory firm.
Rockville, Md.-based Institutional Shareholder Services (ISS) said it has evaluated the transaction Palm has put before stockholders for a vote on Oct. 28 and recommended stockholders approve it.
The three-part transaction would result in the spin-off of PalmSource as a subsidiary responsible for developing and licensing the Palm OS platform for handheld computers and smartphones. The split would also trigger the distribution of PalmSource common stock to Palm’s stockholders.
The deal also would result in the acquisition of Handspring and the issuance of shares of Palm common stock — immediately following the PalmSource distribution — to Handspring stockholders.
After the spin-off and the acquisition have resolved, Palm said it will assume a new name: palmOne.
In its report ISS said, “the PalmSource distribution allows both software and hardware groups to focus on each company’s respective business plans and products. Also, the merger of Palm’s Solutions Group with Handspring would allow for a stronger combined company with the potential strategic synergies. Therefore, we believe the transaction warrants shareholder support.”
ISS’s comments are generally held favorably with shareholders. For example, analysts point to ISS’s favorable advisement of the HP/Compaq merger as the turning point in the heated proxy battle.
A Palm spokesperson told internetnews.com, unlike HP’s trials, Palm’s proposal would be noticeably “un-controversial.”
“We appreciate ISS’ concurrence that the proposed Palm transaction warrants stockholders’ support,” said Eric Benhamou, Palm chairman and interim chief executive officer.
Benhamou said he will stay on as chairman of palmOne and flip the CEO office keys to Todd Bradley. Handspring luminaries Donna Dubinsky and Jeff Hawkins are also on the palmOne team. Hawkins would become chief technology officer for the merged company. Dubinsky’s role will be to retain a seat on the merged company’s board of directors. The company’s product line will bear one of the company’s three subbrands: Zire, aimed at consumers and multimedia enthusiasts; Tungsten, targeting mobile professionals and business; and Treo, the subbrand for smartphones, which are marketed to both individuals and businesses.
“Palm is confident the transaction will result in the creation of the leading handheld-software platform company and an even stronger market leader in mobile devices and solutions. We believe these ‘pure-play’ companies will attract new sets of investors and lead to increased stockholder value,” Benhamou said.
PalmSource CEO David Nagel will retain his title and post once the split is complete. The company continues to make headway including collaborating with IBM
to advance the development of next-generation Web Services applications for Palm Powered devices.
The company said its stockholders at the close of business on Sept. 23, 2003, would be entitled to vote on October 28.
Palm also announced that the Securities and Exchange Commission on Friday, Sept. 26, declared effective Palm’s registration statement on Form S-4. That form includes the proxy statement that will be mailed to Palm stockholders related to the annual meeting.
If the proposal is approved by shareholders, the “PALM” ticker symbol would split into PalmSource’s “PSRC” and PalmOne’s “PLMO.”