Palm, Inc. and Extended Systems Inc. today announced that they have mutually and amicably agreed to terminate their proposed merger agreement for Palm to acquire Extended Systems without payment of any termination fee. A proposed acquisition was announced March 6 and was expected to close in June.

The slowing economy and market conditions led both companies to conclude that a termination of merger plans would best serve both companies and their respective shareholders.

"While this turn of events is disappointing, Palm and Extended Systems agree that this is the right thing to do at this time. Palm will continue to target the enterprise aggressively via leveraged partnerships and alliances with a number of companies, including Extended Systems," said Carl Yankowski, Palm chief executive officer. "We've worked well together in the past, and I expect more of the same to come. We've both come away with a much deeper appreciation of our enterprise customers' needs."

"Extended Systems' commitment to providing a complete mobile computing solution to the enterprise market remains unchanged," said Steve Simpson, Extended Systems chief executive officer. "We will continue to work closely with Palm to offer CIOs tools to deploy mission-critical applications to their mobile work force."

The executives of both companies agree that offering enterprise customers a combined solution of Palm's handheld devices and Extended Systems' mobile infrastructure software will continue to be a priority. Palm also will work with other companies to provide solutions to enterprise customers, and Extended Systems will continue to provide mobile infrastructure software that supports all handheld-device operating system platforms, including the Palm platform.