A Disney-controlled company seeking to acquire Polaroid Corp. is considering a plan to dismantle the instant camera pioneer if its hostile takeover succeeds, court testimony has revealed. Shamrock Holdings Inc. President Stanley P. Gold testified Wednesday on the first day of a critical legal battle with Polaroid that no decision has been made on the proposal from Wertheim Schroeder, Shamrock's investment adviser. Gold said the investment bank recommended that Shamrock sell off Polaroid's manufacturing businesses, cut back on research and development, reduce the administrative staff and settle pending antitrust litigation with Eastman Kodak Co. Previously, Shamrock had said only that it would reverse Polaroid's decision to enter the 35mm film business, settle the Kodak suit and sell off certain Polaroid assets. Shamrock advisers identified those assets as real estate valued at roughly $200 million. Polaroid fell 75 cents a share to close at $38.50 in consolidated New York Stock Exchange trading Wednesday. Gold was the only witness in the first day of the Chancery Court trial, which is scheduled to take five days before Vice Chancellor Caroline Berger. Opening arguments were be given later in the trial. Shamrock, a Burbank, Calif.-based television and radio concern controlled by Roy E. Disney, filed suit in July against Polaroid. Shamrock is seeking unspecified damages and asking the court to permanently enjoin or rescind Polaroid's employee stock ownership plan that would all but prevent Shamrock from acquiring Polaroid. The plan places 14 percent of Polaroid stock in employees' hands. Under Delaware takeover law, a hostile bidder must acquire more than 85 percent of a target's outstanding shares for control. Polaroid is incorporated in Delaware. The 10-million-share, $300 million employee stock plan was announced July 12, the same day Polaroid canceled a July 13 meeting with Shamrock and a week before Shamrock made its first $40-a-share bid for Polaroid. Shamrock claims stock plan was designed to thwart a takeover. Shamrock was rebuffed in its unsolicited bid before making a hostile offer of $42 a share last month that put a value of $2.6 billion on the company that introduced instant snapshots in 1948. Polaroid said the offer was too low and advised stockholders to reject it. Gold said that if the July 13 meeting had been held, he would not have told Polaroid he discussed takeover financing with several banks. He also did not intend to discuss Wertheim Schroeder's proposals, Gold said. ``There was no decision made on those things, and, no, I wasn't going to tell (Polaroid) about them. We hadn't made any decisions on (Wertheim Schroeder's) ideas,'' Gold said. He said the meeting ``was to determine whether or not we could have continued dialogue.'' Gold said that under an agreement with Polaroid, Shamrock was not to ``make any proposals or offers which would require disclosure'' during the meeting. He acknowledged that selling Polaroid's assets or settling the Kodak case would not have required public disclosure. Gold also testified that he had furnished information about the proposals to several banks, including Wells Fargo and the Bank of Nova Scotia. ``But I did not ask them to finance'' the entire acquisition, Gold said. A January trial is scheduled to determine damages in Polaroid's successful patent infringement lawsuit against Kodak. Polaroid is seeking $5.7 billion. Gold said he told the banks that Shamrock was exploring a takeover of Polaroid. Shamrock wanted to know if the banks would be interested in financing the venture if Shamrock decided to proceed, Gold said.
