Shamrock Boosts Polaroid Bid, Threatens Proxy Fight

Shamrock Holdings boosted its hostile takeover bid for Polaroid Corp. from $2.4 billion to $3.1 billion Thursday and vowed to launch a proxy fight to oust the company’s board of directors.

The move by the Burbank investment company--which is owned by the family of Roy Disney, nephew of the late Walt Disney--surprised stock traders and analysts. It revived what appeared to be a stalled takeover attempt for Polaroid, the instant photography company based in Cambridge, Mass.

Analysts said the new offer puts pressure on Polaroid to counter with a defensive move, such as selling a minority stake or promising shareholders part of the money it expects to get this year from winning a patent infringement case against Eastman Kodak.

“It caught Polaroid with their heads low. They had to go into a huddle this morning,” said Brenda Lee Landry, an analyst with the Morgan Stanley & Co. securities firm.

The threat of a proxy fight at Polaroid’s annual meeting, scheduled for May 9 in Wellesley, Mass., adds a key twist to the six-month-old battle because Polaroid lacks a staggered board of directors.

A staggered board is a defensive shield used by most large companies to prevent a majority of directors from being swept out by dissident shareholders at any one time. Typically, about one-third of a company’s directors on a staggered board face election each year.

All 12 of Polaroid’s directors, including 10 outside board members, face election in May. To replace them, Shamrock needs the support of only a simple majority of the shares voted at the meeting. Shamrock said its nominees to the board will be committed to selling Polaroid, either to Shamrock or a higher bidder.

Polaroid’s only comment was that its directors will review the offer and advise shareholders later. Shamrock President Stanley P. Gold said the offer was raised and the proxy fight threatened because Polaroid’s directors have steadfastly spurned Shamrock’s bids.

“There’s still enough of a Pollyanna in me to believe the outside directors will believe this is a reasonable offer. They ought to call me up, invite me in and see if we can work out something,” Gold said.

Shamrock’s bid is being raised $5 a share. The company, which already owns 4.9 million Polaroid shares, is offering $45 each for the shares it doesn’t own, including 9.7 million disputed shares held by a Polaroid employee stock plan. Shamrock contends that Polaroid placed the shares in the stock plan illegally last year as an anti-takeover move.

Last month, a Delaware Chancery judge upheld Polaroid’s stock plan, a decision Shamrock is appealing to the Delaware Supreme Court. Under its new bid, Shamrock said, the offer will be raised to $47 a share if it succeeds in having the 9.7 million shares ruled invalid.

In New York Stock Exchange trading Thursday, Polaroid rose $3.125 a share to $39.875.

Shamrock said it expects $1.61 billion of the money it needs to come from banks, with $1.4 billion coming from the investment banking firms Drexel Burnham Lambert and Wertheim Schroder and a partnership that Shamrock formed called Emerald Isle.