August 24, 2010
On August 24, 2010, the Delaware Chancery Court granted final approval of a $69 million payment to settle all claims in a shareholder suit relating to Xerox Corporation’s (“Xerox”) acquisition of Affiliated Computer Services, Inc. (“ACS”) (NYSE: ACS). This action was filed on behalf of ACS shareholders against members of the Board of Directors of ACS (“the Board”), ACS, Xerox and Boulder Acquisition Corp., a wholly owned subsidiary of Xerox. BLB&G represented Court-appointed co-lead plaintiff City of New Orleans Employees’ Retirement System (“NOERS”), and litigated this action with co-lead counsel for the class.
The settlement, obtained on the eve of trial, serves to release all claims in this matter. In exchange for the release of all claims, Darwin Deason, ACS’s founder and Chairman and largest stockholder, has agreed to personally fund $12.8 million of the settlement.
The complaint alleged that members of the Board breached their fiduciary duties by allowing the Company’s founder and Chairman, Darwin Deason, to extract hundreds of millions of dollars through the acquisition at the direct expense of ACS’s public shareholders for his high vote Class B shares. The complaint further alleged that Xerox aided and abetted the Board’s breaches of fiduciary duties.
Speaking on behalf of NOERS’ Board of Trustees, Chairman Jerry Davis commented on the shareholder victory, stating: “We’re very pleased with the result of our ongoing efforts on behalf of ACS investors. In challenging the actions of both Deason and Xerox, we demonstrated that public companies need to be held accountable when transactions are unfairly structured to favor holders of high vote shares at the expense of the other shareholders.” Mr. Davis further commented on the impact of the settlement stating: “This recovery sends a clear message to corporate boards that shareholders will not tolerate the payment of a premium to high vote stockholders at the expense of other investors. The precedents resulting from this case will help to discourage bad corporate governance practices, which result in these types of transactions, in the future.”