Palm Agrees To Settle Suit Over H-P Acquisition, Details Talks

   DOW JONES NEWSWIRES 
 

Palm Inc. (PALM) said it and other defendants have agreed to settle a possible class-action lawsuit filed last month in connection with Hewlett-Packard Co.'s (HPQ) planned acquisition of the smartphone maker for about $1 billion in cash.

The company did not specify any payments in connection with the proposed settlement, although it did say the plaintiffs would seek an award of attorneys' fees and expenses.

In a filing with the Securities and Exchange Commission on Wednesday, Palm said it denied all liability related to the suit, which accused the defendants of breaching a duty to shareholders by failing to get the highest offer possible for the company.

Palm also said it was not required to disclose more information about its merger talks, but agreed to do so to avoid delaying the merger and to minimize the expense of defending the suit.

It previously described some aspects of the sale negotiations in a filing last month. The latest filing fills in some details but does not name the other bidders besides H-P, which offered $4.75 a share on April 13.

The latest filing says a potential buyer referred to as Company C reduced its bid to $5.50 a share from an earlier one of $6 to $7 a share because of information it learned in a detailed due-diligence review.

In addition, Palm's board concluded that private-equity firms were not likely buyers because of the company's projected revenues and cash flows and the state of the private-equity and acquisition financing markets at the time.

Palm's shares lost 2 cents, to $5.66 in after-hours trading. The stock was down 43% this year as of the close.

-By Kathy Shwiff, Dow Jones Newswires; 212-416-2357; [e-mail]