Micro Focus International PLC

Micro Focus International PLC (MFGP) Accused of Misleading Investors About Its Merger

According to the complaint, Micro Focus’ merger with HPE was valued at $8.8 billion and was projected to triple Micro Focus’ revenues. Despite touting that the merger was a “compelling opportunity to create significant value for both companies’ shareholders,” Micro Focus failed to inform investors that: (i) the company was suffering from worsening revenue trends; (ii) HPE Software did not have the operational capabilities or loyal customer base to justify its purchase price or to reverse worsening revenue trends; and (iii) Micro Focus had failed to successfully integrate with HPE Software. The truth came to light when Micro Focus began to report disappointing financial results on September 6, 2017, eventually causing Micro Focus’ ADS price to fall to $12.99 on March 22, 2018—a decline of more than 54% from its price on the date of the merger’s close.

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