Shareholder group backs Palm merger plan

The proposed merger of handheld computer maker Palm with rival Handspring got a boost on Tuesday, when a leading shareholder group voiced support for the deal.

Institutional Shareholder Services, a company that advises large shareholders how to vote on proxy matters, advised Handspring stockholders to vote in favor of the merger with the Palm Solutions Group, Handspring said. The merger is scheduled for vote during a special meeting of Handspring shareholders on Oct. 28, and is expected to close the same day.

Milpitas, Calif.-based Palm announced its plan to acquire its competitor, based in Mountain View, Calif., in June. It plans to spin off its operating system unit, known as PalmSource, as a separate company and to merge Handspring with its hardware division. In August, the handheld makers completed regulatory requirements for the deal.

Handspring said the recommendation from ISS is a positive sign for the merger.

"With support from our stockholders in approving this merger, we believe the combined company will continue to be a global leader in handheld computing and communications," Handspring CEO Donna Dubinsky said in a statement.