Hewlett-Packard announced that it has agreed to purchase struggling handheld maker Palm for $5.70 per share of Palm common stock in cash or an enterprise value of approximately $1.2 billion.

The transaction has been approved by the HP and Palm boards of directors. There has been limited information released so far, but it appears that HP’s main interest in Palm is the webOS operating system. The company stated that that it will use Palm 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 said.

Palm has been shopping around for a buyer for several weeks. HTC reportedly walked away from the deal after reviewing Palm’s balance sheet. Lenovo was among the more likely buyers of Palm. HP is somewhat a surprise, but could give the company jumpstart to compete with companies such as Dell. However, it remains to be seen how much value webOS really has, especially if we see Android, Blackberry and the iPhone conquering the mobile market at this time.

It appears that HP/Palm’s most likely competitor to be negatively impacted would be Nokia. With Palm acquired and decent financial and marketing backing, it could impact Nokia’s smartphone business more than any other company.

HP said the acquisition is subject to customary closing conditions, including the receipt of domestic and foreign regulatory approvals and the approval of Palm’s stockholders. The transaction is expected to close during HP’s third fiscal quarter ending July 31, 2010.

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