Shamrock Holdings Hikes Offer for Polaroid Corp.

An investment group owned by members of the Roy E. Disney family sweetened its takeover proposal for Polaroid Corp. on Friday, but some analysts said the offer still was too low to succeed.

Shamrock Holdings, which on July 19 offered $2.3 billion for Polaroid, improved its bid by promising to distribute to the camera maker’s shareholders 40% of the proceeds from a successful Polaroid lawsuit. Shamrock also repeated an earlier pledge to increase its offer again if Polaroid provides evidence that it is worth more.

The new offer stemmed from a ruling Thursday by Federal District Judge A. David Mazzone in Boston, who upheld a 1985 court decision that Eastman Kodak Co. infringed on seven Polaroid instant photography patents. A court still must decide how much Kodak will pay Polaroid, which sued for $5.7 billion.

Shamrock’s amended bid was delivered as Polaroid’s directors were meeting to consider the Burbank investment firm’s earlier offer, which amounted to $40 a share.

“In light of the new letter, no action was taken on the earlier letter,” Polaroid said in a prepared statement.

Stock Price Drops

Polaroid’s board will meet again to consider the new offer but no date has been set, said Marcia Phillips, a company spokeswoman.

Apparently in response to disappointment with the new bid, Polaroid’s stock fell $1 to close at $42.12 1/2 on the New York Stock Exchange.

Analysts said the takeover attempt is muddled by the fact that no one will know Polaroid’s actual value until a court decides on the award for the Kodak case. Some analysts said Polaroid could be awarded $1 billion to $2 billion.

“At this point, they (Polaroid managers) don’t know what the company is worth. It’s hard to calculate, so I don’t think they’re interested in making a decision,” said James Daniel, an analyst with Brown Bros.

An award in the $1-billion to $2-billion range would make Polaroid worth about $45 a share, according to Leslie Wayte, an analyst at Argus Research.

“I think Shamrock’s ($40-a-share) offer is a relatively fair price,” said Wayte. “The company might be able to get a higher price, but not much higher.”

ESOP Is Issue

Another issue in the takeover battle is Polaroid’s recently established employee stock ownership plan, or ESOP, which put 14% of the company’s stock in employees’ hands. Shamrock is suing to invalidate the ESOP, claiming that Polaroid’s management established the trust as part of an illegal attempt to entrench itself by keeping a significant amount of stock within friendly hands.

“With regard to the (ESOP), . . . we will continue to vigorously pursue the litigation,” the Shamrock letter to Polaroid said.

Shamrock has interests in television, radio, oil and music retailing.