Common Sense or Greed... Looking for More for Palm (PALM, HPQ)

Investing

Published: April 29, 2010 6:25 am

Last Updated: April 27, 2020 7:21 pm

Palm Inc. (NASDAQ: PALM) may have enough votes lined up for its takeover by Hewlett-Packard (NYSE: HPQ), or it may not. With Bono’s Elevation Partners and insiders having large stakes and all the bottom fishers who bought in hoping for a deal after the most recent blow-up, you would think they could secure a buyout. It was always believed that an acquisition would come after its recent troubles. The problem is that it was expected to be a take-under. The public can complain about the price endlessly, but Palm is going to have a hard time selling itself at $5.70.

Here are some of the filings from last night:

Law Offices of Howard G. Smith (in Pennsylvania) Announces Investigation On Behalf of Shareholders of Palm, Inc.
Robbins Umeda LLP Announces an Investigation of the Acquisition of Palm, Inc. by Hewlett-Packard Company
Finkelstein Thompson LLP Announces Investigation of Palm, Inc.
Levi & Korsinsky, LLP (NYC, New York) Investigates Possible Breach of Fiduciary Duty by the Board of Palm, Inc.

Those are just the preliminary filings from last night, none of which are formal class action suits as of yet. There will likely be class action suits filed on behalf of Palm holders before the week is out. That is just par for the course in M&A where a company is being acquired for far less than its 52-week highs.

To show why the $5.70 deal might not matter, the stock closed at $4.63 on Wednesday but has a 52-week range of $3.65 to $18.09. Shares went out last night in the after-hours session at $5.83 and traded over $5.90 after the news-related stock halt was lifted. More important than the 25.9% gain, a massive 54,756,233 shares traded in the after-hours session alone according to NASDAQ after-hours data.

Someone believes the deal is either going higher or needs to go higher. Make that a bunch of someones. Whether a higher price comes from Palm or from someone else matters not at this point.

JON C. OGG

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