After HTC and other suitors walked away from potential acquisition, HP has just stepped up to announce it will buy the beleaguered Palm for $1.2 billion. This is very close to the previously rumored acquisition price and represents $5.70 per share of Palm common stock.

As expected would be the case from any potential buyer, HP bought Palm for its WebOS mobile operating system and IP portfolio. This is hoped to boost HP’s efforts in the $100 billion smartphone market as well as the low end/cost-competitive tablet market where it’s placing many bets.

From the press release:

The combination of HP’s global scale and financial strength with Palm’s unparalleled webOS platform will enhance HP’s ability to participate more aggressively in the fast-growing, highly profitable smartphone and connected mobile device markets. Palm’s unique webOS will allow HP to take advantage of features such as true multitasking and always up-to-date information sharing across applications.

HP meanwhile brings Palm, and WebOS specifically, better capital resources for development and a distribution backbone to push the OS into more devices. This is something that Palm sufficiently lacked. The company, its device sales, stock price and balance sheet have been in a tailspin over the last year, positioning this deal as a veritable savior for Palm.

This could conversely mean trouble for another arguably sliding mobile OS that powers HP devices: Windows Mobile (now Windows Phone 7). HP is staying quiet about the development road map in the wake of this deal, but it can’t mean good things for Microsoft, nor Android and Chrome’s positioning with HP devices.

A stockholder and analyst webcast is about to start at 5 EST and can be streamed here.

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