Smartphone maker Palm Inc said it would offer 20 million common shares for $16.25 each, a discount of 5 percent to the stock's Tuesday close.

Palm expects net proceeds of about $313.1 million, the company said in a filing with the SEC on Wednesday. It may get $359.9 million if an over-allotment option is exercised in full.

Underwriters have the option to purchase up to 3 million additional shares to cover over-allotments.

The stock rose about 15 percent in the past five days, fueled by anticipation of the offering, chatter about a possible takeover bid, and traders covering short position.

Shares of the company were down 7 cents in pre-market trade Wednesday. They closed at $17.07 Tuesday on Nasdaq. (Reporting by Mansi Dutta in Bangalore; Editing by Ratul Ray Chaudhuri)