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Shamrock’s Bid for Polaroid Is All but Ended : Court Ruling Clearing Way for Stock Buyback Plan a Key Victory for Target

Times Staff Writer

Shamrock Holdings’ fading takeover bid for Polaroid Corp. is virtually over in the wake of a Delaware Supreme Court action Thursday that cleared Polaroid to buy back as much as 22% of its stock.

The $800-million, $50-a-share repurchase of as many as 16 million shares is a key anti-takeover measure taken by the instant-photography giant in its 8-month-long effort to fend off Shamrock’s $3-billion bid. Once the buyback is completed, about 30% of the instant photography giant’s stock will be in friendly hands, owned either by a Polaroid employee stock ownership plan or Corporate Partners, a friendly investment fund.

Shamrock said nothing about dropping its bid. Stanley P. Gold, its president and chief strategist, could not be reached for comment. But Shamrock’s $45-a-share offer is clearly in jeopardy as it continues to lose every major court fight challenging Polaroid’s anti-takeover shields.

“This is a dead deal from my perspective,” said B. Alex Henderson, a Prudential-Bache securities analyst who follows Polaroid.

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Plans to Tender Shares

Shamrock, a Burbank investment firm owned by the Roy E. Disney family, said the company and its partners will tender the 4.96 million shares they own to Polaroid as part of the stock buyback, which they were expected to do to protect their investment.

Tendering the shares does not mean Shamrock will eventually sell all of them to Polaroid. Most likely, Polaroid will buy about 1.1 million shares, or 22% of Polaroid’s stake, on a pro rata basis, stock traders said. That will allow Shamrock and its partners to recover nearly $60 million of the $165 million spent to buy their shares.

The stock buyback is a key element in the three-part defense Polaroid has successfully used to fend off Shamrock. The other two parts are the sale of about 14% of its shares to an employee stock ownership plan and the sale of preferred stock for $300 million to a friendly investment fund, Corporate Partners, that gives Corporate Partners an immediate voting stake of about 8%. Last week, a Delaware state court judge upheld all three measures.

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After the buyback, those two groups will control about one-third of Polaroid’s stock. In addition, another 30% of Polaroid’s stock is believed to be held by individuals, who tend to side with management in takeover fights more often than institutional investors or stock speculators.

Traders and analysts speculated that Shamrock is likely to stick with the Polaroid fight at least until the Delaware Supreme Court decides whether to scrap the Polaroid employee stock ownership plan and the Corporate Partners transaction, which Shamrock contends were illegal moves to fight its bid. Lawyers for both sides have until April 18 to submit written arguments.

Traders and analysts also said it may at least go through the motions of a proxy fight at the Cambridge, Mass., company’s annual meeting tentatively scheduled for May. Shamrock has said it would try to oust Polaroid’s board of directors and replace them with its own nominees.

Traders said Shamrock may look soon for a way to sell its stock, either in the open market or through a private transaction. They speculated that Polaroid’s employee stock ownership plan might be one buyer.

Polaroid’s stock closed at $40.50 a share in composite trading on the New York Stock Exchange, down 37.5 cents.


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