Rigrodsky & Long, P.A. Appointed as Co-Lead Counsel in Class Action Brought on Behalf of Harbin Electric, Inc. Shareholders

Rigrodsky & Long, P.A. Appointed as Co-Lead Counsel in Class Action Brought on Behalf of Harbin Electric, Inc. Shareholders

On May 24, 2011, the Honorable Elizabeth Gonzalez of the District Court for Clark County, Nevada issued an Order appointing Rigrodsky & Long, P.A. as Co-Lead Counsel in In re Harbin Electric, Inc. Shareholder Litigation, Lead Case No. 11 A 627656.

On October 11, 2010, Harbin Electric, Inc.’s (“Harbin” or the “Company”) Chairman and Chief Executive Officer (“CEO”), Tianfu Yang (“Yang”), along with others, transmitted a letter to the Board of Harbin, seeking to acquire all of the outstanding shares of common stock of the Company that he did not own for $24 per share, in cash (“Proposal”).  The value of the Proposal was $753.2 million.  At that time, Yang owed 31.1% of the Company’s common stock.

On June 20, 2011, the Company announced that it had entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Tech Full Electric Company Limited (“Tech Full”), wholly owned by defendant Yang, the Company’s Chairman and CEO, and Tech Full Electric Acquisition, Inc. (“Acquisition”), a wholly owned subsidiary of Tech Full.  Prior to the closing on the Merger Agreement, Yang, affiliates of Abax Global Capital and certain of the Company’s employees and officers (together with Tech Full and Acquisition, the “Buyout Group”) will contribute their shares of Company stock to Tech Full.  Pursuant to the terms of the Merger Agreement, Yang and Tech Full will acquire all of the outstanding shares of common stock of the Company not currently owned by the Buyout Group for $24.00 per share in cash.  The Buyout Group currently owns 40.6% of the Company’s common stock.

Plaintiffs brought this class action on behalf of all Harbin public shareholders and alleged that they were entitled to enjoin the Proposal.  Not only was the consideration offered to Harbin shareholders grossly inadequate, but the negotiation and structure of the Proposal were the result of an unfair process that lacked full and fair disclosure of all material information.  Because the Proposal would mark the end for Harbin as a public company and will force its public shareholders to abandon their ownership of the Company, the Individual Defendants had a duty both to conduct a fair process in seeking the best possible price to maximize the value of the Company’s shares.  Rather than fulfilling their duty to engage in a fair process, however, plaintiffs alleged that the Individual Defendants agreed to a deal that reflects a strong preference for Yang and his affiliates, who will be given a chance to reap the Company’s future successes.