Hewlett Packard announced plans to buy fledgling Smartphone maker Palm in a deal valued at $1.2 billion.

HP claims Palm's WebOS will help it expand in the smartphone market and Palm's extensive experience in smartphone design should also come in handy. HP is buying Palm shares at $5.70 and it will spend around $1 billion cash on the deal, with an additional $200 million towards servicing Palm's debt. The buyout should be finalized by July.

Although Palm pioneered the smartphone and PDA market, it was eventually overtaken by the likes of Nokia, Apple and RIM. Market watchers speculated that Dell could seek to acquire it, but HP was either faster or more keen to strike a deal.