Palm's board wouldn't grant an exclusive agreement, with two other suitors still in the field, unless HP improved its offer. Instead, HP just repeated its original offer. In the meantime, told by Palm that its offer was not competitive, Company A wasn't willing to raise the ante. Palm also balked with regard to Company B, which had said that the transaction might take several months longer than usual to complete, something Palm was unwilling to accept, along with the uncertainty over what the final value of the deal might be for Palm's stockholders. That's when Company B opted out, and Company C suddenly stepped in, offering $6 to $7 per share on April 18.

On April 19, Palm sent draft merger agreements to both HP and Company C. Palm and HP senior management huddled over the next two days, after which, on April 22, HP boosted its offer to $5 per share, again asking for a 28-day period of exclusive negotiations. The same day, Company C told Palm it was lowering its offer to $5.50 per share and it, too, requested a period of exclusive talks.

The Palm deal makers flagged a range of potential snags in the Company C offer, including a higher potential for risk, and a $60 million termination fee if the deal didn't go through based on certain conditions. The two groups "engaged in extensive negotiations" over three days but by the end of April 25 were unable to resolve their differences.

On April 24, Palm CEO Jon Rubenstein told the HP team that they needed to improve their offer "significantly and immediately." HP responded later in the day with an offer of $5.70 per share. Palm was still negotiating with both companies. HP was closer than Company C to meeting Palm's concerns in the merger draft now on the table.

Palm told Company C that another bidder had offered a higher value and more favorable terms. Company C decided not to raise its bid but did offer to buy some patents and take a non-exclusive webOS license, for a one-time cash payment of $800 million. Palm's board rejected that offer.