Home Diagnostics, Inc. Board Under Investigation Over Nipro Corporation Offer

An investigation on behalf of current investors Home Diagnostics, Inc. (Public, NASDAQ:HDIX), who purchased HDIX shares before February 03, 2010, over potential breaches of fiduciary duty and other violations of state law in connection with an alleged unfair takeover price was announced.

The investigations by law firms focus on potential breaches of fiduciary duty and other violations of state law by the Board of Directors of Home Diagnostics, Inc. arising out of their attempt to sell Home Diagnostics, Inc. (Public, NASDAQ:HDIX) to Nipro Corporation.

On February 03, 2010 Home Diagnostics, Inc. (NASDAQ: HDIX) announced that it signed a definitive merger agreement with Nipro Corporation, under which Nipro will acquire all outstanding shares of Home Diagnostics' common stock, $.01 par value, for a cash purchase price of $11.50 per share (or aggregate consideration of approximately $215 million). According to Home Diagnostics the transaction has been approved by Nipro and the board of directors of Home Diagnostics, and the offer price represents an approximately 90% premium to the closing price of Home Diagnostics' common stock on February 2, 2010, and an approximately 83% premium to Home Diagnostics' average closing price for the preceding 90 days.

But according to one investigation by a law firm “the transaction appears to be unfair” to current investors of Home Diagnostics, Inc. (NASDAQ:HDIX) because the “offer to purchase Home Diagnostics, Inc. (HDIX) appears opportunistically timed to take advantage of the current economic downturn” and is “grossly unfair, inadequate, and substantially below the fair or inherent value of HDIX”.

Home Diagnostics, Inc. reported in 2007 Total Revenue of $115.60million with a Net Income of $9.63million and in 2008 Total Revenue of $123.58million with a Net Income of $9.64million. Shares of Home Diagnostics, Inc. (Public, NASDAQ:HDIX) traded after the announcement at $11.43 per share, and before the news at $6.10 per share. HDIX shares reached in 2008 $10.50 per share, and in 2007 over$12 per share.

The investigation “concerns whether the Home Diagnostics, Inc. Board of Directors breached their fiduciary duties to Home Diagnostics, Inc. (HDIX) stockholders by failing to adequately shop the Company before entering into this transaction and whether Nipro Corp. is underpaying for Home Diagnostics, Inc. (HDIX) shares, thus unlawfully harming HDIX stockholders.” Another investigation calls the deal even “suspicious because it appears from a review of the Company's financial statements that the inherent value of the Company's stock is greater than $11.50 per share and also because it appears that the Board of Directors has agreed to refrain from shopping the Company to other potential suitors to obtain a better price than the $11.50 per share offered. “