Disease Detection Says Takeover Effort Beaten

Tiny Disease Detection International in Irvine said it has beaten back what it called a hostile takeover effort by its former parent, Environmental Diagnostics.

Environmental Diagnostics, which moved from Irvine to Burlington, N.C., last year, launched a proxy contest in June to solicit shareholder support for a slate of DDI directors nominated by Environmental Diagnostics.

But a preliminary tally of votes cast at DDI’s Aug. 31 annual meeting shows that all five incumbent directors--including Chairman James G. Watt, who served as secretary of the interior during President Reagan’s first term--have been reelected.

Both DDI and Environmental Diagnostics manufacture medical diagnostic kits.

DDI’s victory comes as the 3-year-old medical technology company has begun shipping products to giant Du Pont Corp. under an exclusive distribution agreement expected to boost DDI’s product sales revenue to more than $500,000 this year from just under $3,000 in 1987.

At the root of the feud between the two firms is Environmental Diagnostics’ claim to what DDI maintains is a proprietary new technology for creating the diagnostic kits--a technology developed after DDI was spun off by Environmental Diagnostics in a 1987 public offering. Environmental Diagnostics maintains that it has the right to use the technology and to market all products DDI is developing.

H. Thad Morris, DDI president, said Wednesday that he expects certified results of the shareholder vote to be released Friday by the independent election inspectors.

He would not discuss the DDI-backed incumbents’ margin of victory.

Officials at Environmental Diagnostics could not be reached for comment.