HP and Palm announced today they have entered into an agreement for HP to purchase Palm, a provider of smartphones powered by the Palm webOS mobile operating system. The boards of directors of both companies have approved the purchase of Palm for approximately US$1.2 billion, or $5.70 per share of Palm common stock in cash.

This agreement will enable HP to participate more aggressively in the fast-growing smartphone and mobile device markets, according to a company statement. Palm’s webOS will offer HP features such as true multitasking and always up-to-date information sharing across applications, according to the statement.

“Palm’s innovative operating system provides an ideal platform to expand HP’s mobility strategy and create a unique HP experience spanning multiple mobile connected devices,” said Todd Bradley, executive vice president of HP’s Personal Systems Group, in the statement.

Palm’s CEO Jon Rubinstein showed his excitement in a statement, saying, “We’re thrilled by HP’s vote of confidence in Palm’s technological leadership…”

Under the merger’s terms, Palm stockholders will receive $5.70 in cash for each share of common stock. The transaction is expected to close during HP’s third fiscal quarter ending July 31.

Rubinstein is expected to remain at the company, but his role has not yet been defined.