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Polaroid Sells Stock Block in Bid to Foil Shamrock Takeover

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From Associated Press

Polaroid Corp. today issued $300 million in stock to a private investor group and said it will buy back $1.1 billion of its own stock in an apparent move to block a hostile takeover by Shamrock Holdings Inc.

A spokesman for Shamrock, a Disney-owned company that has been pursuing Polaroid since last July, would not comment immediately on the program’s substance, but said the plan’s objective is clear.

“We have to take a look at the announcement, but I think it’s absolutely obvious that it’s an effort to block Shamrock,” spokesman John Grimaldi said.

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But Polaroid officials denied the convertible stock issued to Corporate Partners L. P., a firm managed by New York investors Lester Pollack and Ali Wambold, was a defensive move.

“It’s designed simply to deliver a portion of the company’s current value while enhancing the growth prospects for its values,” Polaroid spokesman Sam Yanes said.

Polaroid was at $40.25 in mid-morning composite New York Stock Exchange trading, up 12.5 cents from its opening price today.

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In addition to the sale of preferred stock, financing for the repurchase program likely will be provided in part by cash on hand and borrowing from a syndicate of banks led by Morgan Guaranty Trust Co. of New York and possibly other sources, Polaroid said in a statement.

Companies often buy back their own stock to reduce the number of shares outstanding and raise the per share price. Such practices have become common among companies seeking to discourage a takeover.

$50 Per Share Conversion

Yanes said the common stock’s conversion price would be $50 per share and would have voting rights on an as-converted basis, but did not say over what time period the stock will be purchased.

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Convertible preferred stock can be exchanged at a specific ratio by its holder at any time for shares of a corporation’s common stock.

Polaroid officials one week ago rejected as inadequate Shamrock’s sweetened $45 per share offer for all Polaroid stock, including 9.7 million shares issued under Polaroid’s controversial employee stock ownership plan.

Shamrock officials vowed last week to proceed with plans to nominate a slate of candidates for election to Polaroid’s board at the company’s annual meeting on May 9.

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