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Palm, Inc. investors File Lawsuit For Accepting the HP Takeover Offer

  • If you currently hold shares of Palm, Inc. (Public, NASDAQ:PALM) ), you have certain options and you should contact the Shareholders Foundation, Inc.

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Lawsuit Overview

Company
Palm, Inc.
Security
NASDAQ: PALM

Case Name
Palm Deal Case 05/03/2010
Type of Lawsuit
Mergers and Acquisition
Court of Filing
California State Court

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Summary

After Hewlett-Packard Company announced last Wednesday to take over Palm for $5.70 per PALM share at least 7 enraged PALM investors filed lawsuits in California State Court on behalf of current investors in Palm, Inc. ( NASDAQ:PALM) alleging breaches of fiduciary duty by the board of directors of Palm for selling Palm too cheaply to HP.
Palm, Inc., located in Sunnyvale, California, is a provider of mobile products for individual users and business customers worldwide. On Wednesday, April 28, 2010, Palm, Inc. (NASDAQ: PALM) and Hewlett-Packard Company announced that they have entered into a definitive agreement under which Hewlett-Packard will purchase Palm, at a price of $5.70 per share of Palm common stock in cash or an enterprise value of approximately $1.2 billion. According to Hewlett-Packard the transaction has been approved by the Palm, Inc. and Palm boards of directors.

Shares of Palm, Inc. (NASDAQ:PALM) traded after the announcement above the over at $5.86 per share, and reached as early as April 12, 2010, $6.20 per share, and in February $11.29 per share. PALM shares were down from its 52weekHigh of $18.09 per share.

According to the complaint the plaintiff alleges that the Board of Directors breached their fiduciary duty for accepting a low-ball offer that doesn’t not truly reflect the intrinsic value of Palm’s shares. The plaintiff alleges, among other things, that the offer accepted by the board represents a discount to Palm’s stock price on April 12, 2010, and is less than half the price at which Palm stock was two month ago. While many Palm shareholders would suffer a substantial loss, certain defendants stand to profit substantially by way of their affiliation with private equity firm Elevation Partners, L.P., which owns over 30% of Palm and hand-picked Palrn's current Chairman of the Board, President, and Chief Executive Officer, so the lawsuit. Between October 2007 and September 2009 Elevation Partners, L.P invested a total of $460million in Palm in multiple transactions. Under the proposed acquisition Elevation Partners, L.P would be able to earn a profit of approximately of $25million for its founders, two of which are current Palm board members.