Founder and chairman Darwin Deason and Cerberus Capital Management had offered to buy ACS for $62 per share, but the board turned thumbs down on the offer.

Paul McDougall, Editor At Large, InformationWeek

November 2, 2007

2 Min Read

Outsourcer Affiliated Computer Services said late Friday that it's "pleased" that five independent members of its board of directors have resigned following a confrontation with founder and chairman Darwin Deason over Deason's plan to take the company private.

"ACS is pleased that the company's independent directors have agreed to resign," the company said in a statement.

Deason and Cerberus Capital Management had offered to buy all outstanding shares of ACS for $62 per share. ACS's board, however, turned thumbs down on the offer -- insisting it didn't reflect the company's true value.

That led to a public outburst by Deason, who accused the board of not acting in shareholders' best interests. "The board has lost the trust and support of the company's shareholders," Deason said in a letter released Friday by ACS.

The letter was addressed to ACS independent board members Robert Holland, J. Livingston Kosberg, Dennis McCuiston, Joseph O'Neill, and Frank Rossi, all of whom stepped down Friday.

Deason and ACS's board have been at loggerheads for months over the proposed buyout.

In a previous communication, the board said it was worried about Deason's statement that he plans to "continue as chairman for at least the next five years" regardless of whether the sale of ACS goes through. Members of a special board committee that evaluated Deason's offer said they are concerned that the pledge could dissuade other potential buyers from bidding on ACS.

Under Deason, ACS has been no stranger to controversy, and taking the company private would allow the chairman to escape the SEC's spotlight.

In recent months, regulators have focused on ACS's handling of executive stock options. Last year, ACS CEO Mark King and CFO Warren Edwards stepped down after the company conceded that their options had been improperly backdated.

In 2006, Canadian prosecutors in Alberta charged ACS with bribing police officers there to secure help winning a contract to provide the province with photo radar traffic enforcement systems. Two Canadian police officers also were charged.

Questions also have been raised about a deal under which ACS leased a corporate jet from a leasing company owned by Deason.

About the Author(s)

Paul McDougall

Editor At Large, InformationWeek

Paul McDougall is a former editor for InformationWeek.

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