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Palm Sells 25% Stake to Private Firm

Jun 4, 2007, 8:18 AM by (staff)

Less than a week after releasing the Foleo Treo companion device, Palm announced that it has sold 25% of the company to a private equity firm, Elevation Partners. Elevation paid $325 million for its quarter share of Palm, which is reorganizing itself in an attempt to strengthen the business. As part of the restructure, Palm is bringing in Jon Rubinstein as executive chairman to help manage the company. Rubinstein formerly ran Apple's iPod division. Also as part of the deal, Fred Anderson, Apple's former CFO, and Roger McNamee, a co-founder of Silver Lake Partners, will join the board. Palm will pay a $940 million dividend to shareholders, which breaks down to $9 per share. U2's Bono is one of the founders and investors of Elevation Partners.

New York Times »

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Comments

This forum is closed.

This forum is closed.

katrina

Jun 4, 2007, 12:10 PM

Why pay a dividend now?

Ok, maybe someone out there knows more than me about this, why would a strugling tech company pay a $9/share dividend? Most tech companies never pay dividend, and then usually only if they have an amazing year or something... It seems to me this money would be better spent on R&D and advertising.

ericzeman

Think of it this way. If there's 100 shares in Palm, Elevation needs to get 25 of them without just increasing the number of shares. So they have to reimburse the existing shareholders to essentially "give up" 25% of the shares they already hold. That...
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