A class action has been filed against the board of directors of Affiliated Computer Services, Inc. (“ACS”) (NYSE: ACS), related to the Company’s agreement to be acquired by Xerox Corporation (“Xerox”) in a cash-and-stock transaction valued at approximately $6.4 billion.
Under the terms of the definitive agreement entered into by the parties, ACS shareholders will receive a total of $18.60 per share in cash plus 4.935 Xerox shares for each ACS share they own. In addition, Xerox will assume ACS’s $2 billion in debt and issue $300 million of convertible preferred stock to ACS’s Class B shareholders. The investigation concerns possible breaches of fiduciary duty and other violations of state law related to approval of the acquisition by the ACS board of directors. Also, Chairman Darwin Deason will continue to reap his $3.5 million in compensation, plus benefits, until May of 2014. In return, Deason agreed to vote all of his shares in favor of the takeover by Xerox. Deason’s shares comprise a 43.6% ownership of the company. Moreover, ACS stock traded at close to $51 per share as recently as April 9, 2009, while the average target set by analysts for ACS stock is over $54 per share, or $62 according to one analyst. Additionally, the ACS Board agreed to a no-solicitation provision and a termination fee of $194 million, which is designed to discourage any potential bidders.