Polaroid Sells Stock Block in Bid to Foil Shamrock Takeover

CAMBRIDGE, Mass. —  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.

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.

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.

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.