October 14, 2016
A large shareholder has taken the OEM to court over its plan to split the company.
Fortune reported that Darwin Deason “sued Xerox on Tuesday in a US District Court in Dallas” because of the OEM’s plan to divide the company. In a statement ,Xerox said that “Deasons’s lawsuit was meritless” and that the company “would seek its dismissal”. It emerged that the Conduent business “includes the operations of Dallas-based Affiliated Computer Services”, which is the company Deason “founded”, and that Xerox acquired for $6.4 billion (€5.8 billion) in 2010.
The split was announced in January, and the OEM was reported to say at that time that “activist investor Carl Icahn would get three Conduent board seats” after the split. Icahn Associates owns 9.77 percent of Xerox, and as such is the OEM’s largest shareholder “according to Thompson Reuters data”, while Deason’s share makes him the “largest individual investor and the fourth largest overall”.
In his complaint, Deason said that he “obtained preferred convertible stock” in Xerox “as part of the ACS deal”, and that the stock “will now be marooned in the legacy business” after the split, despite Conduent established, as Deason said, as “the faster growing business”. The shareholder has asked the court “to block the separation of the Conduent business”, and to “declare that depriving him of his right to receive a convertible stake in Conduent violated Xerox’s certificate of incorporation”.
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