Apple Tried To Buy Palm Before HP Won The Bidding War -- And RIM Completely Blew The Deal

The race to buy Palm earlier this year was fast and hot, with the company's bankers contacting 16 companies about the deal, including five serious potential suitors.
HP won the bake-off, acquiring Palm for $1.2 billion in late April.
But other companies involved in the talks included Silicon Valley's increasingly competitive rivals, Apple and Google, as well as BlackBerry maker Research In Motion, we have learned from a source familiar with the negotiations.
According to our discussions with this person:

• Apple was mostly interested in Palm's huge library of intellectual property and patents (450+ patents on file, another 400+ applications on file). And unlike some other bidders, Apple even seemed committed to funding Palm's operations, perhaps to challenge RIM's dominance in the keyboarded segment of the smartphone industry, our source says. (There's a bunch of problems with this idea, such as the idea of Apple supporting two rival app platforms, but that's what this person says.) Ultimately, Apple didn't bid high enough, while HP offered an amount the board couldn't say no to. (Recall that Steve Jobs tried to buy Palm years ago in its first life, too, when it was owned by 3Com.)

• RIM basically had the deal in its hands and "had to work incredibly hard to blow it," our source recalls. RIM initially came in higher than HP, but HP upped its bid, our source says.

• Google, likely interested in Palm's intellectual property, supposedly only wanted it because Google thought Apple might want it. But Google supposedly didn't know Apple was actually bidding for Palm, so it didn't proceed.

• Nokia, bizarrely, wasn't anywhere near the deal. That may prove to be a stupid move, which we'll expand on later.

How does this compare with what is publicly known about Palm's deal process?
In May, Palm filed a long merger proxy with the SEC, detailing how it decided to sell itself -- including the part where it was in contact with 16 potential buyers -- and how HP and four other anonymous companies pursued it. ("Company A," "Company B," etc.)
In summary:

• "Company A" offered $600 million in cash and didn't raise its bid. We assume this is Apple, making its lowball cash bid but not getting into a bidding war.

• "Company B" proposed to acquire Palm in a stock-for-stock transaction, but also said that its "proposed transaction would take at least several months longer to close than is customary." We assume this is Lenovo, the Chinese PC maker that was reportedly the "leading candidate" for Palm in mid-April.

• "Company C" first wanted to acquire patent rights from Palm, then later tried to buy Palm as a whole. It originally offered $6-7 per share, but after more diligence, lowered its bid to $5.50 per share. We assume this is RIM.

• "Company D" contacted Palm to discuss an intellectual property transaction but did not make a proposal to acquire Palm. Discussions continued intermittently and fizzled out. We assume this is Google.

HP then ended up acquiring Palm for $5.70 per share, and is now in the process of shaping Palm's WebOS platform into its own operating system, for tablets, mobile devices, and printers.