Palm CEO Ed Colligan told CNBC that the mobile computer maker agreed to sell a 25% stake to a private equity firm to "provide shareholders both with an immediate return and to benefit from what we consider a long-term upside."
In addition to selling the stake to Elevation Partners for $325 million, Palm said it will make a special payment of $9 a share to its shareholders.
“The Elevation (Partners) team is clearly in this for the long haul,” Colligan said in an exclusive interview. “They have a different investment horizon than most private equity firms. They want to invest in teams and transformational technology. That’s what they’re doing here. We believe with our $300 million in cash and consistent cash flow that we’ve been generating that we’ll have plenty of resources to invest where we need going forward.”
The sale of a stake in Palm comes after months of speculation that the company, which is best known for its Treo mobile phone, would be sold. Rumors had centered on a deal with rival phone makers Motorola
Palm will use the new proceeds from the sale of the stake along with existing cash and $400 million of new debt to finance the cash payout.