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Shamrock Boosts Offer for Polaroid But Camera Giant Takes No Action

August 12, 1988

CAMBRIDGE, Mass. (AP) _ An investment firm owned by a Disney family scion sweetened its takeover bid for Polaroid Corp. on Friday, and the camera company’s board met for six hours before postponing action on the offer.

Analysts interpreted the new offer by Shamrock Holdings Inc. of Burbank, Calif., as an effort to gradually raise the stakes for the instant camera pioneer.

″It’s all part of a very delicate quadrille being danced by a large number of players and all we’re seeing is the first two steps,″ one Wall Street analyst said.

Shamrock’s new offer was $40 a share plus giving stockholders the right to 40 percent of any settlement in Polaroid’s $5.7 billion patent infringement case against Eastman Kodak Co.

That bettered the July 22 bid, which offered a flat $40 a share for Polaroid, or about $2.3 billion, but attached several contingencies.

On Wall Street, Polaroid’s stock fell $1 a share to $42.12 1/2 .

After the board meeting, Polaroid said in a statement no action was taken because of the new bid. The 13-member board planned to meet again to consider the offer, but no date was set, spokeswoman Marcia Phillips said.

Analysts said Shamrock’s bid fell short of what Polaroid would be willing to consider but might be part of a strategy to heighten interest in the company that introduced instant snapshots more than 50 years ago.

″I think they don’t expect it to be a blitzkrieg,″ said Peter Enderlin of Smith Barney, Harris Upham & Co. ″I think they’re prepared for a drawn-out struggle or possibly even drawn-out negotiations.″

Shamrock, wholly owned by the family of Roy E. Disney, nephew of the late Walt Disney, has interests in three television and 14 radio stations, an energy services company and 56 home entertainment software stores in Los Angeles.

The company failed in an attempt last year to acquire Wherehouse Entertainment Inc., which analysts said raises questions about its ability to go after Polaroid, which reported sales of $13.3 billion last year.

″They’re trying to prove they’re for real but nobody’s too sure,″ said William Relyea of Eberstadt Fleming Inc. ″There’s a very healthy degree of skepticism about what they’re up to.″

In its new bid, Shamrock, which owns 6.9 percent of Polaroid, rescinded an earlier requirement making a deal contingent on Polaroid dropping a $190 million pension surplus plan. But it said it would continue to fight a recently announced employee stock ownership plan that includes the issue of 10 million new shares.

Shamrock said it had retained Wertheim Schroder & Co. and Drexel Burnham Lambert Inc. to assist in securing about $1 billion in financing. The new offer was made in a letter from Shamrock chairman Stanley Gold to Polaroid president I. MacAllister Booth.

″We are willing to meet with you at any time to discuss how best to implement the furnishing of such an interest to Polaroid’s shareholders,″ Gold wrote in the letter dated Thursday and released Friday.

Shamrock has filed suit in a Delaware court seeking to overturn the employee stock plan, part of a corporate restructuring that includes 500 to 800 layoffs, a $300 million stock repurchase and entry into the conventional film market. Polaroid is officially a Delaware company.

Under Delaware law, an acquiring company must have at least 85 percent of the target company’s stock to complete a merger. By placing 14 percent of its stock in employee hands, Polaroid has effectively put the 85 percent target out of reach.

Shamrock’s lawsuit charges that Polaroid enacted the plan as an antitakeover device. Polaroid said in March the plan would equal 5 percent of company stock but raised the amount about 10 days before the first Shamrock bid.

Analysts called the new bid speculative because it depends on settling the patent infringement case against Kodak, which was found guilty in 1985 of violating several Polaroid patents on instant cameras and film. The $5.7 billion damages trial is set to begin in January.

Shamrock’s takeover bid values the company at about $2.88 billion if all 71.9 million shares remain outstanding. If the stock issue is rolled back, the value of the company implied by the bid would be $2.48 billion.

Since Shamrock already owns a chunk of Polaroid stock, its cost to buy the rest would be $2.28 billion, assuming defeat of the share issue, or $2.68 billion if the share issue is not defeated.

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