Palm (PALM) finally found a deal, sending shares up 10% early Monday.
The Sunnyvale, Calif., wireless-PDA maker says private-equity shop Elevation Partners will take a quarter stake in the business and help finance a $9-a-share special dividend.
With its Treo phone facing an increasing threat from
Research In Motion's
BlackBerry devices and with the arrival of
hotly anticipated iPhone at the end of the month, Palm has been desperately seeking alternatives for its business.
Elevation, led by tech investor Roger McNamee, will pony up $325 million for a 25% interest in Palm. The company said Monday that it will use the cash and $400 million in debt to pay for a $9-a-share cash distribution to investors.
Once the leader in smartphones, Palm has been unable to redesign its bulky PDA phones to meet the sleek new fashion trend that's sweeping through the handset industry. Rivals such as
have developed slim Qwerty-keyboard phones targeted at Palm's Treo line.
confounded industry watchers last week when it seemed to ignore the trend toward smaller, thinner phones by introducing a $600 mini laptop called Foleo.
As part of its deal, Palm agreed to appoint Jon Rubinstein, a former Apple executive who helped develop the iPod, as executive chairman.
Palm shares surged $1.65 to $17.74 in premarket trading Monday.