Billionaire Darwin Deason wants to stop Xerox's split
- Shareholder claims split would leave him with an "unattractive, low-growth" investment.
- A spokesman for Xerox called the claim "meritless," adding that the split was still on track.
A major Xerox shareholder has filed a lawsuit to block the printing and business process outsourcing giant from breaking off into two separate publicly traded companies.
Billionaire Darwin Deason filed a suit earlier this week in U.S. District Court in Dallas claiming that Xerox will destroy value of his stake in the company if the reorganization is allowed to proceed.
Xerox Corp. CEO Ursula Burns announced earlier this year that the company was planning to reverse its acquisition of Affiliated Computer Services, a Dallas-based firm founded by Deason in 1988.
Xerox bought that business in 2010 for $6.4 billion. It’s now looking to spin off those operations into Conduent, a business process outsourcing business that did $7 billion in revenues in 2015.
Deason claims in court papers that Xerox agreed to give him preferred shares intended to compensate him for his stake in ACS.
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Instead, the company split would leave him with shares in an "unattractive, low-growth document technology business." Those operations have traditionally been centered at a sprawling campus in Webster.
"The reorganization will extinguish important rights and massively destroy the value of Mr. Deason’s unique investment," according to court papers. "(He) will lose the opportunity to participate in the growth of the … business that Mr. Deason was responsible for building."
A spokesperson for Xerox called the lawsuit "meritless" and said the company was on schedule to complete the spit later this year.
"We are confident that the separation and the strategic transformation program we are implementing will enhance value for our shareholders today as well as for future shareholders of Xerox and Conduent," Carl Langsenkamp, said in an email response.
An analyst with New York City-based accounting and legal research firm CFRA Research didn't think the lawsuit would interfere with the split.
"Despite potential for ongoing risks from this lawsuit, we still see the split of the companies occurring by the end of the year," said David Holt, an equity analyst.
Xerox employs roughly 6,500 workers in the Rochester area. It’s legacy documents technology business, founded locally, did about $11 billion in 2015.
TCLAUSEN@Gannett.com