Xerox Corp. shareholder Darwin Deason sued to block a reorganization that would effectively reverse its $6.2 billion takeover of the company he founded, Affiliated Computer Services Inc.
Deason, 76, argues that the split, planned for completion by the end of the year, would leave him with an investment in an “unattractive, low-growth” document technology business, according to a complaint filed Wednesday in federal court in Dallas.
As part of the takeover, Deason negotiated for preferred shares in Xerox that were specifically designed to compensate for his controlling stake in ACS and to “guarantee his continued investment in the combine investment-grade business of the company,” according to the suit. ACS became the heart of Xerox’s business process outsourcing operation, Deason said in the filing. He owns about 6 percent of Xerox shares.
“Mr. Deason’s lawsuit is meritless and we intend to seek its dismissal,” Xerox spokesman Carl Langsenkamp said in an e-mail. “We are continuing to move forward with our planned separation, which we expect to complete on schedule.”
Xerox said in January that the company would split into two publicly traded entities: an $11 billion document technology company based around the namesake copier and scanner hardware; and a $7 billion provider of services to government and industries such as health care and transportation.
Xerox acquired ACS to help the company build its technology services and supplement its declining hardware operations. The deal allowed Xerox to expand into markets including managing and automating electronic payments for governments, processing claims for insurers and even operating parking lot pay stations.
The case is Deason v. Xerox Corp., 16-cv-02856, U.S. District Court, Northern District of Texas (Dallas).
By Erik Larson, with assistance from Jing Cao.