China’s Lenovo has emerged as the favourite contender to buy Palm and could pay as much as US$1.3 billion. Reuters reports that other Asian vendors such as HTC and Huawei have said they are not interested in bidding for the Californian firm. The news agency, citing sources, notes that Palm would fit well into cash-rich Lenovo’s current strategy that focuses on growth through acquisitions and movement into the mobile space. Lenovo is the world’s fourth-largest PC manufacturer and was quoted last week as aiming to generate up to 20 percent of revenue from mobile Internet products in the next five years. An acquisition of Palm would give Lenovo immediate access into the US market. Lenovo’s stock was up almost 6 percent to a 23-month high on Friday, following the speculation.
Last week Palm was reported to have hired Goldman Sachs Group and Qatalyst Partners to find a buyer. Despite very positive reviews of both its webOS software and new smartphones at launch, recent sales at Palm have been disappointing and the company is struggling to revive past fortunes. On Friday Mobile Business Briefing reported that Palm’s CEO Jon Rubinstein claimed the company can survive as an independent business but would consider “a reasonable offer.” Palm’s shares rose 5 percent on the Lenovo news. Interestingly, the Financial Times speculates today that, given Palm’s current financial situation, the company has 12 to 18 months to find fresh capital or complete a sale before the game is up.