Palm's (Quote, Chart) quest to acquire Handspring (Quote, Chart) and then split itself into two companies got a vote of confidence Friday from and independent proxy advisory firm.

Rockville, Md.-based Institutional Shareholder Services (ISS) said it has evaluated the transaction Palm has put before stockholders for a vote on Oct. 28 and recommended stockholders approve it.

The three-part transaction would result in the spin-off of PalmSource as a subsidiary responsible for developing and licensing the Palm OS platform for handheld computers and smartphones. The split would also trigger the distribution of PalmSource common stock to Palm's stockholders.

The deal also would result in the acquisition of Handspring and the issuance of shares of Palm common stock -- immediately following the PalmSource distribution -- to Handspring stockholders.

After the spin-off and the acquisition have resolved, Palm said it will assume a new name: palmOne.

In its report ISS said, "the PalmSource distribution allows both software and hardware groups to focus on each company's respective business plans and products. Also, the merger of Palm's Solutions Group with Handspring would allow for a stronger combined company with the potential strategic synergies. Therefore, we believe the transaction warrants shareholder support."

ISS's comments are generally held favorably with shareholders. For example, analysts point to ISS's favorable advisement of the HP/Compaq merger as the turning point in the heated proxy battle.

A Palm spokesperson told internetnews.com, unlike HP's trials, Palm's proposal would be noticeably "un-controversial."