NEW YORK: Japanese software developer Access Co. on Friday said it would buy handheld computer software maker PalmSource Inc. for about $324 million in cash, in a deal that strengthens Access' roster of products for mobile phones.
Access said it would offer $18.50 per share, an 83 percent premium to Thursday's Nasdaq closing price of PalmSource, the maker of the popular "Palm" operating system.
"The combination of Palm OS with Access' software products is expected to give Access one of the broadest lines of mobile software in the industry," the Japanese company said in a statement.
Palm OS is PalmSource's operating system software which controls tens of millions of handheld personal digital organizers and so-called smartphones like the Palm Treo.
A PalmSource spokeswoman declined to comment on what would happen to the company's nearly 500 employees as a result of the agreement, or the role of its current executives. In June, the company said it was entering "a transition phase" and set plans to cut some 16 percent of its workforce.
The deal appeared to receive the blessing of Palm Inc., PalmSource's biggest customer and the maker of the Treo combination phone and digital organizer. Palm and PalmSource were one company until 2003 when they split in hopes of unlocking each company's individual value.
"Palm's ... expertise, combined with Access' leading software development capabilities, will allow us to continue to deliver great products," Ed Colligan, Palm's chief executive officer, said in a statement. "Access is currently a software technology partner and we look forward to continuing our strong working relationship to advance the Palm OS platform."
With the acquisition, Access will also gain Linux development resources for mobile devices in the United States, France and China.
PalmSource developed the software used in devices made by gadget makers such as Palm, Japan's Sony Corp. and Kyocera Corp., and South Korea's Samsung Electronics Co.
A PalmSource spokeswoman said the deal will not change the company's relationship with the device makers to which it licenses its operating system software.
The company, however, has been struggling to win new licensees in the face of increased competition from Microsoft Corp.'s Windows Mobile software.
Further clouding the Sunnyvale, California-based company's fortunes is talk that Palm would soon introduce a version of the Treo using Microsoft's mobile phone software, a move that would limit PalmSource potential for revenue growth.
"Palm's move (toward Microsoft) is likely to eliminate some, if not all, of the upside in PalmSource's revenues and earnings that might have resulted from the growing success of the Treo in the enterprise market," Needham analyst Charles Wolf said earlier this week in a note to clients.
Access' acquisition of PalmSource is expected to be completed by December. PalmSource will be folded into Access' U.S. unit Apollo Merger Sub Inc.
The deal is worth 34.4 billion yen ($311.3 million) when shares to be converted under stock option schemes are excluded.
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