There's no confirmation yet, but it wouldn't be too surprising if this story turns out to be 100% accurate. In something that is relatively rare in this industry, Palm's okay on the software side, but not on the hardware side (it's usually vice versa). The hardware simply isn't able to compete with the iPhone and high-end Android phones, and on top of that, marketing has been disastrous. To make matters worse, Palm chose the wrong launch partner (Sprint) and was unable to deliver their products worldwide.
Both HTC and Lenovo are said to be interested, as was Dell but they have decided to back out. If it were up to me, I'd definitely prefer HTC - any company that manages to make Windows Mobile phones desirable is a company that can turn Palm around and/or do something useful with the webOS. Can you imagine the HD2 with webOS? +12 awesomeness.
"Palm still has quite a good brand in the US market, and some strong technology, so you can do something with it,” Frank He, a technology analyst at BOC International Holdings Ltd, told Bloomberg, "The shares have gone down a lot and the company may become attractive to anyone looking for a turnaround play."
And just like with Research In Motion's acquisition of QNX Software Systems, there's an intellectual property aspect to all this. Palm has a very long history in the mobile world, and has played a vital role in the early days of the smartphone (and, of course, the PDA), meaning they have a substantial patent portfolio that might come in handy for HTC in its legal battle with Apple.
HTC or no, all this does mean we'll see the end of Palm as an independent company. As a fan of their PDAs, this makes me quite sad indeed, but so is the nature of business. At least Palm is trying to get itself bought instead of just dying in blaze of glory.