PalmSource Agrees to Be Acquired by Japan’s Access
Published September 10th, 2005
PalmSource Inc., a pioneer in the market for software that runs handheld computers, agreed to be bought by Japan’s Access Inc. for $324 million after failing to stem a decline in sales to Symbian Ltd. and Microsoft Corp.
Access, a Tokyo-based company that makes Web browsing software for portable devices, is offering $18.50 per share, an 83 percent premium over Sunnyvale, California-based PalmSource’s $10.09 closing price yesterday, according to statements by both companies today.
PalmSource, whose operating system drives Palm handheld devices and Treo smart phones, is selling itself after a 75 percent slide in its shares in the past two years. The company struggled to turn a profit amid the loss of Sony Corp. as a customer and increased competition from Microsoft and Symbian. Access, maker of NetFront software, said it plans to use PalmSource to develop more applications for mobile devices.
“Both companies can benefit as PalmSource can find an outlet for its software technology, while Access can expand its business,” said Tetsuya Nakamura, a software analyst at Daiwa Institute of Research. “PalmSource has needed a reassessment of its business strategy with mobile phones eating into the PDA market.”
Shares of PalmSource jumped $7.80 to $17.89 at 10:43 a.m. New York time in Nasdaq Stock Market composite trading. The company was spun off from Palm Inc., formerly PalmOne Inc., in 2003.
PalmSource said in June that revenue in fiscal 2006 will fall as much as 8 percent, sending the stock down 10 percent the next day. The company in May agreed to sell the rights to the Palm brand to Palm for $30 million.
Shares of Access rose 2.6 percent to 2.81 million yen at the 3 p.m. close on the Tokyo Stock Exchange’s Mothers section.
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