Case Name: Micro Focus

Settlement Fund: $107,500,000

Claim Filing Deadline: 5/30/2022

Class: All persons who purchased or acquired Micro Focus American Depositary Shares (“ADSs”) issued in connection with the Merger of Micro Focus and the software business segment of HPE (the “Merger”), which was completed on September 1, 2017.

Court: This action is proceeding in two venues: the Superior Court of California, 18CIV01549, and in the U.S. District Court, Southern District of New York, (1:18-cv-06763)

Plaintiff attorneys at Robbins Geller Rudman & Dowd recently announced a global settlement in two pending litigations against Micro Focus International, one in California state court and one in federal court. (Robbins Geller is lead plainifff in the state action.) In both cases, plaintiffs allege that Micro Focus made false and misleading statements and material omissions in the registration statements for the company's American Depository Shares sold in connection to the firm's merger with HPE Software.

How CCC Can Help

Notice packets and claim forms have just been posted, but the team at CCC is ready to discuss this case today. CCC can help in whatever situation you find yourself: we can file en masse for a large group of your client's accounts, we can retrieve old trade data from disparate systems and prepare it all in a readable, ready-to-file format, and we even purchase claims now so you don't have to wait for a distribution. 

What This Case Is About

Micro Focus provides software tools for infrastucture management, from governments to healthcare. (The company was recently acquired by the Canadian tech firm OpenNext, an enterprise software firm.) 

Plaintiffs claim that-- very long story short-- the HPE Software acquistion was a bit of a mess. Or, a complicated mess, so I will turn it over to the Bernstein Litowitz Berger & Grossmann' lead plainitff solicitation from 2018, which does in a paragraph what the second amended complaint in the federal case does over 162 pages. (Bernstein Litowitz was in fact picked as lead plainitff in the Federal action.)

"The Complaint alleges that throughout the Class Period, Defendants made materially false and/or misleading statements and/or failed to disclose that: (1) HPE Software was experiencing significant disruptions in global customer accounts as a result of its de-merger from HP, which had materially impacted HPE Software’s ability to retain customers and for Micro Focus to recognize claimed synergies from the Merger; (2) HPE Software and Micro Focus were experiencing massive employee attrition, including the loss of key sales personnel, and that this loss had adversely impacted the Company’s operational capabilities and revenue trends; (3) Micro Focus was suffering worsening revenue trends and was on pace to significantly miss market expectations for its interim results in its core legacy business for the six months ended October 31, 2017 – with revenues for the Company’s Existing Products portfolio ultimately declining 7% during the period and its licensing revenues in this segment declining 17% during this time – and that these worsening revenue trends were accelerating; (4) Micro Focus was experiencing significant sales execution problems in its North America region; (5) HPE Software did not have the operational capabilities, loyal customer base, products or key personnel to justify its purchase price or to reverse worsening revenue trends; (6) Micro Focus had failed to put in place the operations, procedures and personnel necessary to integrate successfully with HPE Software, or conduct sufficient due diligence, so as to provide a reasonable likelihood that the purported synergies from the Merger would be realized;  (7) the total enterprise value for the Merger was artificially inflated by more than $3.4 billion; and (8) as a result of (a)-(g), the Company’s ability to service the increased debt load it had incurred as a result of the Merger had been materially impaired."

Typed from memory... Well, kind of.

The case has had some twists and turns on its way to a 9-digit settlement. After a dismissal in the federal litigation, plaintiffs appealed but eventually reached a $15 million settlement in 2021. However, this settlement was opposed by the state plaintiffs, who both argued that $15 million woefully undervalued their claims and that the federal court lacked jurisdiction. At long last, this global settlement will resolve both actions.

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CCC’s team is ready to discuss your options in this case. Please give us a call to discuss this settlement or any of the hundreds of funds we participate in each year.

Links:

https://www.rgrdlaw.com/news-item-Robbins-Geller-Secures-107-Million-Settlement-Against-Micro-Focus.html

News:

https://www.reuters.com/legal/litigation/micro-focus-shareholders-grapple-over-settlement-merger-lawsuit-2021-08-16/