Darwin Deason, who made a fortune selling his IT business Affiliated Computer Services to Xerox for $6.4 billion in 2010, is now suing the company over what he calls an “unlawful” corporate reorganization plan. Deason, whose net worth presently stands at nearly $1.3 billion, is Xerox’ largest individual shareholder. More than half of his fortune is tied up in Xerox common and preferred shares. Reached Friday morning, his representatives declined to offer further comment on the news.
The controversy stems from Xerox’ proposed plan to spin off its Business Process Outsourcing unit into a separate publicly traded entity, Conduent Incorporated. In court documents filed this week, Deason argues that such a move would deprive him of his right “to own a preferred, convertible stake” in all parts of Xerox’ current business, as he would not receive a preferred position in Conduent, a high-growth operation that effectively grew from the Affiliated Computer Services acquisition. The decision to reorganize was announced in January of this year, with the goal of finalizing the restructuring by the end of 2016.
Xerox, for its part, denies the lawsuit’s allegations. In response to a request for comment sent early Friday, a public relations representative wrote:
“Mr. Deason’s lawsuit is meritless and we intend to seek its dismissal. We are continuing to move forward with our planned separation, which we expect to complete on schedule. 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.”
Such high stakes litigation is emblematic of Deason’s unique life trajectory. The son of an Arkansas farmer whose family often didn’t have a dollar to spare for movies, he left his small town the day after he graduated high school with $50 borrowed from his dad and a 1949 Pontiac. He headed to Tulsa, Oklahoma, where he got a job at Gulf Oil. He eventually joined Dallas data-processing firm MTech and later took it over after all but his division failed. Deason became CEO at age 29, sold MTech in 1988, and within days started Affiliated Computer Services to handle computer and other business process services for clients such as E-ZPass. He eventually took ACS public and then sold it to Xerox . These days Deason is focused on his family investment office and splits his time between his house in Palm Springs and his 205-foot yacht, Apogee, which is now for sale.
Xerox, which reported 2015 revenues of $18 billion, had hoped that the $7 billion Conduent spinoff would wrap up smoothly. With Tuesday’s legal filing, those plans could now be delayed until well past the new year.