EXHIBIT 99.01
Contacts for Palm Contacts for Handspring
Jimmy Johnson - Investor Relations Brad Driver - Investor Relations
408.503.2771 650.230.5070
jimmy.Johnson@corp.Palm.com bdriver@Handspring.com
Marlene Somsak - Media Relations Allen Bush - Media Relations
408.503.2592 650.230.5029
marlene.Somsak@corp.Palm.com abush@Handspring.com
PALM ANNOUNCES ACQUISITION OF HANDSPRING
TO BOLSTER INDUSTRY LEADERSHIP;
BOARD APPROVES PALMSOURCE SPIN-OFF
Transaction Scheduled to Close in Fall,
Driving Transformation of Handheld Industry
- Combined Leadership Creates Greater Opportunity for Growth and
Innovation
- Operational Synergies Provide Path to Cost Savings and Profitability
- Merged Company to Aggressively Drive the Future of Mobile Devices
MILPITAS and MOUNTAIN VIEW, Calif., June 4, 2003 -- The boards of directors of
Palm, Inc. (Nasdaq: PALM) and Handspring, Inc. (Nasdaq: HAND), a leading maker
of Palm OS (R) smartphones, today announced that they each have unanimously
approved a definitive agreement for Palm to acquire Handspring to form a new,
stronger market leader in mobile computing and communications. The Palm board
also gave final approval for the spin-off of PalmSource, Inc.
"These two bold moves will serve as a powerful catalyst to transform the
landscape of the handheld industry. The strategic choice of merging Handspring
and the Palm Solutions Group of Palm will create the broadest portfolio and the
most-experienced leadership team in the industry, fully capable of delivering
value to customers, partners and shareholders," said Eric Benhamou, Palm, Inc.
chairman and chief executive officer, and chairman of PalmSource. "And the
spin-off of PalmSource will help grow the Palm Economy, attract additional
licensees and unlock shareholder value."
Palm, Inc. consists of two businesses -- PalmSource, a subsidiary responsible
for developing and licensing the Palm (TM) operating system, and the Palm
Solutions Group, a business unit responsible for designing, making and marketing
the world's leading handheld devices (1) . Immediately following the completion
of the spin-off, Handspring will be merged with Palm, and the merged company
will be renamed later in the year.
The transaction, encompassing the spin-off of PalmSource and the merger of
Handspring with the remaining Palm Solutions Group of Palm, is expected to close
in the fall, subject to certain conditions.
Under the proposed terms of the transaction, and following the spin-off of
PalmSource, Handspring's shareholders will receive 0.09 Palm shares -- and no
shares of PalmSource -- for each share of Handspring common stock owned. Palm,
Inc. will issue approximately 13.9 million shares of Palm common stock to
Handspring's shareholders on a fully diluted basis. As a result of the merger,
Handspring's shareholders will own approximately 32.2 percent of the newly
merged company on a fully diluted basis, and Palm's shareholders will own
approximately 67.8 percent.
The value per share to be received by Handspring shareholders will be based on
the Palm share price following the spin-off of PalmSource. The spin-off of
PalmSource will be completed immediately prior to the closing of the Handspring
acquisition.
Acquisition Rationale: Operational Excellence and Proven Innovation
The merger is designed to create a stronger competitor in handheld computing and
communication solutions. Palm Solutions will become better able to realize its
stated objectives of growing the market, maintaining industry leadership, and
achieving consistent profitability. The strategic and operational benefits to
the merged company include:
- Maximizing Palm and Handspring's combined scale and operational
excellence to take full advantage of future growth opportunities;
- Delivering an unmatched portfolio of innovative mobile products from
traditional and multimedia handhelds to wireless handhelds and
smartphones;
- Adding Palm's strong brand and distribution channels to Handspring's
highly regarded Treo product line and carrier relationships; and
- Enhancing the Palm management team -- including hardware and software
design, engineering, and marketing -- to help drive handheld computing
into deeper and broader solutions.
The merged companies expect greater revenue opportunities. They also expect to
obtain improved operating efficiencies of approximately $25 million in cost
savings annually. The cost savings assume combined employee reductions of
approximately 125 people, elimination of overlapping programs and unnecessary
real estate, and the advantages of increased volume in manufacturing and
distribution. Handspring employees are expected to move to Palm Solutions
headquarters in Milpitas, Calif.
Merger of Leaders
"This is a merger of leaders -- the world's leading maker of handheld computers
and a global leader of Palm OS based smartphones," said Todd Bradley, Palm
Solutions Group president and chief executive officer. "Having the best and
broadest portfolio of innovative products that deliver what matters most to
customers, sold by a robust channel and built from a foundation of operational
excellence, is the best formula to expand our young, promising markets."
"Palm and Handspring share a vision that handheld computers and smartphones have
the potential to redefine the landscape of personal computing," said Donna
Dubinsky, chief executive officer of Handspring. "This merger brings together
the best teams in the industry, and strengthens us to realize this vision."
The merged company will be led by Bradley, who will continue as president and
chief executive officer, and will be structured around two business units:
handheld computing solutions, led by Ken Wirt, currently senior vice president,
sales and marketing, for Palm Solutions; and smartphone solutions, to be led by
Ed Colligan, current president and chief operating officer for Handspring. Jeff
Hawkins, Handspring chairman and chief product officer, will become chief
technology officer for the merged company.
"The vision and leadership that Jeff and Ed have brought to the industry will be
tremendous assets to the Palm Solutions management team. Together, we'll advance
the industry in ways never before possible," Bradley said.
Board Composition
Upon execution of the spin-off and closing of the merger, the Palm Solutions
board of directors will consist of seven members from the current Palm, Inc.
board plus three members of the current Handspring board of directors: John
Doerr, Bruce Dunlevie and Dubinsky. David Nagel, PalmSource president and chief
executive officer, will leave the Palm, Inc. board. Benhamou will continue as
chairman of the PalmSource board, and of the merged company board.
Spin-off Rationale: Focus, Attracting More Licensees and Investors
The separation of PalmSource from Palm, Inc. is based on three principles. They
are that:
- Clarity of focus and mission for both Palm businesses leads to improved
execution;
- Creation of a level playing field among current and future licensees
will lead to more licensees and developers who have deeper commitments
to the Palm OS platform. This is expected to bring greater growth in
the Palm Economy, especially as the market for smartphones emerges; and
- Shareholder value can be enhanced if investors could evaluate and
choose between both businesses separately, thereby attracting new and
different investors.
"This is a great day for the Palm Economy," said David Nagel, PalmSource
president and chief executive officer. "The establishment of PalmSource as an
independent company and the strengthening of our largest licensee mark an
historic day in the handheld industry. As the leading mobile platform provider,
we look forward to the opportunity to attract new customers and to grow the
market for mobile computing and communication products."
Transaction Detail
The spin-off of PalmSource and acquisition of Handspring will be combined into
one transaction. First, all of the shares of PalmSource owned by Palm will be
distributed to Palm shareholders. Second, following the spin-off, Palm will
issue approximately 13.9 million shares to Handspring shareholders in exchange
for their Handspring shares.
The completion of the acquisition is conditioned upon, among other things, the
expiration or termination of the waiting period under the Hart-Scott-Rodino
Anti-Trust Improvements Act of 1976, foreign anti-trust regulatory filings,
approval from shareholders of Palm, Inc. and Handspring, listing of PalmSource
shares on the Nasdaq Stock Market and other customary closing conditions.
Shareholder votes are expected to take place at the two companies' respective
stockholder meetings to be held in the fall.
Palm has received voting commitments from Dubinsky, Hawkins and Colligan -- the
three largest employee stockholders -- to vote certain of their shares amounting
to a total of 37.5 percent of Handspring's outstanding common stock in support
of the proposed merger.
As part of the merger agreement, Palm will provide an initial $10 million line
of credit to Handspring for working-capital purposes until the transaction
closes. Under certain conditions, the line of credit may increase to $20
million, and its maturity may be extended.
The proposed spin-off is expected to be tax-free to Palm and the Palm
shareholders, and the proposed acquisition of Handspring is expected to be
tax-free to shareholders of both companies for U.S. federal income tax purposes.
The merger with Handspring will be accounted for under the purchase method of
accounting.
Morgan Stanley & Co. Incorporated served as financial advisor to Palm and also
provided a fairness opinion. Wilson Sonsini Goodrich & Rosati, Professional
Corporation, served as Palm's legal counsel.
Credit Suisse First Boston, LLC, served as financial advisor to Handspring and
also provided a fairness opinion. Fenwick & West, LLP, acted as legal counsel to
Handspring.
Palm, Inc. and Handspring, Inc. Historical Timeline
1992 - Jeff Hawkins and Donna Dubinsky found Palm, Inc.
1995 - U.S. Robotics purchases Palm, Inc.
1996 - Palm introduces the PalmPilot 1000 and 5000 organizers.
1997 - 3Com purchases U.S. Robotics
1998 - Hawkins, Dubinsky and Colligan leave Palm to create Handspring
2000 - Palm executes an Initial Public Offering, separating from 3Com
2001 - Palm begins building separate businesses
- Todd Bradley named Palm Solutions executive vice president and chief
operating officer (June 1)
- Palm announces plans to create OS subsidiary (July 27)
- Palm OS subsidiary acquires assets and talent from Be, Inc. (Aug. 16)
- David Nagel is named Palm OS subsidiary president and chief executive
officer (Aug. 27)
2002 - Palm further builds on two businesses
- OS subsidiary creation completed (Jan. 1)
- Bradley promoted to president and chief operating officer of Palm
Solutions (May 2)
- OS subsidiary named PalmSource
- PalmSource names founding board of directors (June 24)
- Bradley named Palm Solutions chief executive officer (June 25)
- Palm Solutions and PalmSource move to separate campuses (August)
- Sony invests $20 million in PalmSource, marking first outside
investment (Oct. 8)
- PalmSource adds four new licensees in year
- IRS approves the spin-off as tax-free for U.S. citizens' federal
income-tax purposes (December)
2003 - Palm announces plans to acquire Handspring
About Handspring
Handspring is a leading innovator in personal communications and handheld
computing. The company's products include the award-winning Treo family of
smartphones, and client and server software for fast Web access from handheld
devices and mobile phones. Today Handspring sells its products and accessories
at www.Handspring.com and through select Internet, retail and carrier partners
in the United States, Europe, Asia, Australia, New Zealand, Canada Middle East,
and Mexico/Latin America. For further information, please visit
www.Handspring.com/international.
About PalmSource, Inc.
Information about PalmSource is available at http://www.palmsource.com/about/.
About Palm, Inc.
Information about Palm, Inc. is available at http://www.palm.com/aboutpalm.
Forward-looking Statements
This press release contains forward-looking statements within the meaning of the
federal securities laws, including, without limitation, statements regarding the
following: the transformation of the handheld industry; the growth of the Palm
economy and the attraction of additional PalmSource licensees as a result of the
spin-off; the integration of
the Handspring management team and employees with the Palm management team and
employees; the timing of the consummation of the merger and the spin-off; the
ability of the Palm Solutions Group to realize its objectives of growing the
market, maintaining industry leadership and achieving consistent profitability;
the strategic and operational benefits to the merged company following the
acquisition; the expectation of greater revenue opportunities, operating
efficiencies and cost savings as a result of the merger; employee reductions;
the relocation of Handspring employees to Palm's Milpitas headquarters; the
management and board composition of Palm following the merger; and the tax-free
nature of the spin-off and merger for U.S. federal income tax purposes. These
statements are subject to risks and uncertainties that could cause actual
results to differ materially, including, without limitation, the following: the
approval of the transaction by the Palm and Handspring stockholders; the
satisfaction of closing conditions, including the receipt of regulatory
approvals; the ability of Palm and PalmSource to operate as separate companies
after the spin-off; the successful integration of Handspring's employees and
technologies with those of Palm; fluctuations in demand for Palm's and
Handspring's products and solutions; the ability to successfully combine product
offerings; the possibility that the business cultures of Palm and Handspring are
incompatible; possible development of marketing delays relating to product
offerings; the introduction of new products by competitors or the entry of new
competitors into the markets for Palm's and Handspring's products; the
possibility that the Internal Revenue Service will determine that the spin-off
will not be tax-free to Palm and its stockholders; an acquisition of over 50% of
the stock of Palm or PalmSource within two years following the spin-off that is
determined by the Internal Revenue Service to be part of a plan or series of
related transactions involving the spin-off, making the spin-off taxable to
Palm. The merged company may not successfully integrate the operations of Palm
and Handspring in a timely manner, or at all, and the merged company may not
realize the anticipated benefits or synergies of the merger. A detailed
discussion of other risks and uncertainties that could cause actual results and
events to differ materially from such forward-looking statements is included in
Palm's and Handspring's most recent filings with the Securities and Exchange
Commission. Neither Palm nor Handspring undertakes any obligation to update
forward-looking statements to reflect events or circumstances after the date of
this press release.
Conference Call Information
Senior management from Palm and Handspring will host a conference call today at
10:30 am EDT to discuss the transaction. Investors, the news media, and others
may listen to a live teleconference of the meeting by dialing 888.335.6680
(domestic) or 973.935.8508 (international). No passcodes are required. Due to
the expected number of participants, please call at least 15 minutes before the
conference is to begin.
Slides with an audio webcast also are available at http://ir.palm.com by
clicking on an available link.
A replay of the conference call will be available until June 16, 2003 by calling
877.519.4471 (domestic) or 973.341.3080 (international). Passcode is 3974950.
Broadcast Video and Other Palm Materials
Video is available for free download to television stations at The NewsMarket (
www.thenewsmarket.com ), a web-based news and video archive for distributing
broadcast-standard video and other materials. Please register on
www.thenewsmarket.com to browse and preview an extensive content library and
order footage directly from your desktop. Registration and ordering on the site
is free.
A photo is linked to this press release and available for download at the PR
Newswire website ( www.prnewswire.com ).
Satellite Information
TIME:
Start Date/Time: June 4, 2003 07:30:00 EASTERN
End Date/Time: June 4, 2003 08:00:00 APPROX OUT: 0
Transponder--Galaxy 3-06 C-band
BAND-C
CONFIRMATION: 06042003-268
ORBITAL POSITION: 95 DEGREES (W)
CARRIER: PanAmSat
BANDWIDTH: 36 MHz
UPLINK FREQ: 6045 MHz (H)
DOWNLINK FREQ: 3820 MHz (V)
Additional Information And Where To Find It
Palm, Inc. and Handspring, Inc. intend to file a registration statement on Form
S-4 containing a joint proxy statement/prospectus in connection with the
reorganization transaction involving Palm, PalmSource, Inc. and Handspring. In
addition, PalmSource intends to file a registration statement on Form S-4
containing a prospectus relating to the distribution of PalmSource shares to the
existing stockholders of Palm. Investors and security holders are urged to read
these filings when they become available because they will contain important
information about the reorganization transaction described herein. Investors and
security holders may obtain free copies of these documents (when they are
available) and other documents filed with the Securities and Exchange Commission
at the Securities and Exchange Commission's web site at www.sec.gov. In
addition, investors and security holders may obtain free copies of the documents
filed with the Securities and Exchange Commission by Palm by contacting of Palm
Investor Relations (877-696-7256 or Palm.IR@corp.palm.com). Investors and
security holders may obtain free copies of the documents filed with the
Securities and Exchange Commission by Handspring by contacting Handspring
Investor Relations (Brad Driver at 650-230-5070 or bdriver@handspring.com).
Investors and security holders may obtain free copies of the documents filed
with the Securities and Exchange Commission by PalmSource by contacting
PalmSource Investor Relations (Al Wood at 408-400-3000 or Al.Wood@palmsource.com
).
Palm and its directors and executive officers may be deemed to be participants
in the solicitation of proxies from the stockholders of Palm and Handspring in
connection with the reorganization transaction described herein. Information
regarding the special interests of these directors and executive officers in the
reorganization transaction described herein will be included in the joint proxy
statement/prospectus of Palm and Handspring described above. PalmSource and its
directors and executive officers also may be deemed to be participants in the
solicitation of proxies from the stockholders of Palm and Handspring in
connection with the reorganization transaction described herein. Information
regarding the special interests of these directors and executive officers in the
reorganization transaction described herein will be included in the prospectus
of PalmSource described above Additional information regarding the directors and
executive officers of Palm is also included in Palm's proxy statement for its
2002 Annual Meeting of Stockholders, which was filed with the Securities and
Exchange Commission on or about August 26, 2002. This document is available free
of charge at the Securities and Exchange Commission's web site at www.sec.gov
and from Palm by contacting Palm Investor Relations (877-696-7256 or
Palm.IR@corp.palm.com).
Handspring and its directors and executive officers also may be deemed to be
participants in the solicitation of proxies from the stockholders of Handspring
and Palm in connection with the reorganization transaction described herein.
Information regarding the special interests of these directors and executive
officers in the reorganization transaction described herein will be included in
the joint proxy statement/prospectus of Palm and Handspring described above.
Additional information regarding these directors and executive officers is also
included in Handspring's proxy statement for its 2002 Annual Meeting of
Stockholders, which was filed with the Securities and Exchange Commission on or
about October 1, 2002. This document is available free of charge at the
Securities and Exchange Commission's web site at www.sec.gov and from Handspring
by contacting Handspring Investor Relations (Brad Driver at 650-230-5070 or
bdriver@handspring.com).
# # #
(1) IDC, May 2003 ("Looking for Growth: Handheld market suffers slow start to
2003" by Randy Giusto, Kevin Burden, Alex Slawsby, and Ross Sealfon)
Palm OS is a registered trademark of PalmSource, Inc., a subsidiary of Palm,
Inc. Palm is a trademark of Palm, Inc.