Palm is selling a quarter of its company to a private equity firm to arm itself with new leadership, most notably the former technical guru behind the iPod, an Associated Press report said.
The Associated Press report said the deal with Elevation Partners, which agreed to invest $325 million for a 25% stake in Palm, will infuse new talent in the handheld computer pioneer as it battles stiffening competition that will only get tougher with Apple's June 29 launch of the iPhone.
As part of the deal, Palm will pay a special distribution of $9 per share, or about $940 million in cash, to shareholders, the report said.
The Associated Press report further quted Palm as saying that the special distribution would be financed by the new investment, cash on hand and $400 million in new debt.
The report said Palm's two board members, former CEO Eric Benhamou and D. Scott Mercer, will resign.
Elevation partners' Fred Anderson and Roger McNamee will join Palm's board, and Apple's former top hardware engineer, Jon Rubinstein will join the board as executive chairman, the report said.