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Palm Shareholders Voting on Merger and Spinoff

The handheld maker is merging with rival Handspring and spinning off its operating system.

At a meeting Tuesday morning, shareholders of



are expected to give the thumbs-up to the company's plan to spin off its software arm and merge its hardware business with that of rival



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Proxy advisory firm Institutional Shareholder Services already has given the union the green light.

If all goes as planned, Palm shareholders will walk away with an additional 0.32 shares of the new software entity, PalmSource (ticker PRSC) for each share of Palm they hold.

In other words, an investor who owns 100 shares of Palm -- to be renamed PalmOne (ticker PLMO) -- will receive 32 shares of PalmSource stock.

At the same time, Handspring stockholders will receive 0.09 of a share of Palm for each share of Handspring they own.

Palm has talked up the deal, first

outlined in June, as a way to give it scale and allow greater efficiencies. The merged companies expect to save around $25 million a year.