Investor in Xerox Suing to Stop Split Up of Company
Darwin Deason a billionaire filed the suit earlier in the week at a Dallas U.S. District Court claiming Xerox would destroy the value of his shares in the business if the reorganization were allowed to go through.
Xerox CEO Ursula Burns made an announcement earlier in the year that Xerox would reverse its Affiliated Computer Systems acquisition. Affiliated was founded in 1988 by Deason.
Xerox acquired Affiliated during 2010 for a price of $6.4 billion. It is now wanting to spin off the operations into a business called Conduent, which is an outsourcing business that had revenues during 2015 of $7 billion.
However, Deason claims in documents from the court that Xerox had agreed he would be given preferred shares that were intended to compensate him for the stake he had in Affiliated Computer Services.
Instead, Xerox splitting would leave Deason with shares of a low-growth, unattractive document tech business, indicated court documents.
This reorganization would extinguish many important rights as well as hugely destroy the value of Deason’s unique investment, showed court papers.
He would lose an opportunity to take part in the company’s growth that he himself had been responsible for creating.
A Xerox spokesperson said the lawsuit was meritless and that the company remained on schedule to follow through with its split later in the year.
The company is very confident that separating the business and its strategic transformation program that is being implemented will enhance the value for shareholders not only today but for future shareholders of Conduent and Xerox.
An analyst based on Wall Street in a legal research and accounting firm know as CFRA Research believed the lawsuit would not interfere with the company going through with its planned split.
Despite a possible ongoing risk from a pending lawsuit, the company sees the split of the two companies taking place before the end of 2016, said the equity analyst.
The legacy documents business known as Xerox was originally founded in Rochester, New York and did over $11 billion in revenue during 2015.
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