Hewlett-Packard Co. has agreed to buy Palm Inc. in a $1.2 billion deal.

Palo Alto-based HP (NYSE:HPQ) said it will pay $5.70 per share in cash to shareholders of (NASDAQ:PALM). HP is paying a 23 percent premium over Palm's closing price Tuesday of $4.65. Palm closed Wednesday trading at $4.63.

HP said the boards of both companies have approved the deal. Palm CEO Jon Rubinstein is expected to remain in charge of the company.

The deal ends weeks of speculation that were triggered by Palm's third quarter results on March 18. Despite the fact that Palm beat Wall Street projections for revenue and earnings, some analysts had dropped their target price on the stock to zero, indicating they didn't think a buyer could be found.