Palm, facing increasing competition in the industry, is selling a 25 percent stake to Elevation Partners, the private-equity firm that has Bono as a partner and a bunch of former Apple Inc. executives, reports WSJ. Elevation will invest $325 million for that stake...Palm will pay $940 million in cash to existing shareholders whose ownership of the company will drop to 75 percent, the story says. The company will fund the restructuring with the $325 million from Elevation, $400 million in new debt and more than $200 million of cash on its balance sheet to complete the transaction.

Jon Rubinstein, Apple’s former head of hardware who helped pioneer iPod, will join Palm as executive chairman and head up product development. Fred Anderson, a partner at Elevation and a former Apple CFO, will join Palm’s board, as will another Elevation partner, Roger McNamee. Palm’s longtime chairman, Eric Benhamou, and another director, Scott Mercer, will leave the company’s board.

NYT: The reorganization comes after several months of unsuccessful efforts to find a buyer for Palm. Palm held preliminary talks with several rivals, including Motorola and Nokia, and PE firms including Silver Lake Partners and the Texas Pacific Group, but none was willing to buy out the entire company amid such uncertainty over its future.