Micro Focus (MFGP) -- 2018-2024 -- shareholder class action settlement

This page gives additional details for only one of the many HP/HPE-related stocks. Start here: Stock Step-by-Step  (Not officially endorsed or supported.)

(Revised Jun 5, 2023; Updated Feb 12, 2025)  Question? Email: info@hpalumni.org

This page is supplemental information for our "Micro Focus Stock" page  -- it you haven't been to Micro Focus Stock already, please start there.

Members report Nov 2024 payout of $1.63 per MFGP "A" share if none were sold. (Otherwise, amount varies.)

If you received Micro Focus shares between Sep 1, 2017 and Aug 28, 2019 - as part of the Sep 1, 2017 HPE Software spinoff or otherwise. Settlement of shareholder class action lawsuit.  Claim deadline was Jun 30, 2023. Members report that payouts were received in Nov 2024.

Claim deadline extended to Jun 30, 2023. Members report that payouts were received in Nov 2024.

May 10, 2023: New info and clarifications, based on comments from HPAA members:
- You may have Micro Focus (MFGP) stock from the 2017 HPE Software spinoff in multiple accounts.
- The $6.43/share you were paid in Feb does not affect your right to claim under the settlement.
- How to deal with the Apr 2019 change from "A" to "B" shares.

Many current or former HPE stockholders have received one or more copies of a "Notice of Proposed Settlement of Class Action re Micro Focus International Securities Litigation" in postal mail.

The first notices were sent from the court-appointed Claims Administrator on Mar 5, 2023; another batch in early May. If you received several notices, you probably had MFGP shares in multiple accounts -- such as HP incentive plan accounts or personal brokerage accounts. The notices provide no clue as to which accounts or how many shares in each.

Claim deadline was May 30, 2023, now Jun 30, 2023.

Receipt of the paper notice is not necessary to file a claim. For individual investors, the effort and documentation required to claim may not be worth the effort.

(If you didn't get a copy, see "Documents" > "Settlement Notice" on the Claims Administrator's site: https://www.microfocusclassaction.com )

What happened, in chronological order:

1. Shares issued to HPE shareholders. If you owned any HPE stock on Sep 1, 2017, you received 13.7 American Depository Shares of a UK company, Micro Focus (MFGP) per 100 HPE shares. At the spinoff from HPE, the 222 million MFGP ADS shares were valued at $29.34/share. Since then, MFGP price has ranged as low as $1.25.

2. Cash payout.  Next, if you owned any MFGP stock on Apr 30, 2019, you received 0.8296 new MFGP "B" shares plus $4.30 cash, replacing each original "A" share, after Micro Focus sold the profitable SUSE Linux business.

3. Micro Focus bought by OpenText. If you owned any Micro Focus (MFGP) stock on Jan 31, 2023... All Micro Focus stock was bought for cash by OpenText at almost double the market price. MFGP stock was retired. Either $6.43 per MFGP "B" share was paid into your brokerage cash account or a check was mailed by Feb 14 2023. This does not affect your right to claim under the settlement, which is based on events from 2017 to 2019. (Previous history: Micro Focus Stock)

4. Class action suit settlement. In 2018, several investors sued Micro Focus, HPE, and several individuals, alleging that they "...misrepresented and omitted material facts in the registration statements and prospectus..." If you received Micro Focus shares between Sep 1, 2017 and Aug 28, 2019 -- as part of the Sep 1, 2017 HPE Software spinoff or otherwise -- you have a potential claim in the expected settlement of a shareholder class action lawsuit. Even if you didn't get a notice in the mail. No matter when you disposed of the MFGP shares (even if you held them until they were purchased by OpenText in Jan 2023)

Members report Nov 2024 payout of $1.63 per MFGP "A" share if none were sold. (Otherwise, amount varies.)

The case had been ongoing for five years and involved millions of pages of documents and 21 depositions.

-The judge approved only a total $37M of fees and expenses for the 23 lawyers (from San Diego to New York, representing the six plaintiffs) -- instead of their request for $70M.

- It looks like few individual Micro Focus shareholders heard about the case, entered claims, and succeeded with their claims. (Half of HP/HPE is owned or controlled by a dozen investment funds, who have systems to track corporate actions, settlements, and so forth.)

https://www.microfocusclassaction.com/Content/Documents/Judgment and Order Granting FA.pdf

Who can claim:

"If you received Micro Focus ADSs or ADRs in connection with the September 2017 Merger, or otherwise purchased or acquired ADSs or ADRs, or the right to receive such ADSs or ADRs, between September 1, 2017 and August 28, 2019, inclusive, you are a Settlement Class Member..."

When:

Claim deadline was May 30, 2023, now Jun 30, 2023.

Fairness Hearing was June 27, 2023, now July 25, 2023, court hearing is scheduled to consider the settlement, the formula for allocating the settlement fund, and plaintiff attorney fees and expenses.

1099. In January, 2025, a member asked the Micro Focus Securities Litigation Settlement Claims Administrator “Will I be getting some kind of 1099 form for tax filing?” The answer was, “At this time, we are not intending to send 1099's”.

The official settlement site  gives this phone number: 1-855-604-1743

If you paid tax on the 2017 Micro Focus transaction, the cost basis for your MFGP stock should be reset to approx. $29.34/share, instead of being linked to the cost basis of your HPE stock. Be sure you note this in your own records (and in your broker's records, if your broker tracks cost basis) -- so that you don't pay tax twice on the same theoretical "gain."

FAQs

What's an ADS?  Micro Focus is based in the UK. An American Depositary Share (ADS or ADR) is a "U.S. dollar-denominated equity share of a foreign-based company available for purchase on an American stock exchange." Since Sep 2017, the MFGP depositary bank has been Deutsche Bank: https://www.adr.db.com/drwebrebrand/dr-universe/dr_details.html?identifier=11243

How much will I get? The total amount of the Settlement is $107.5 million. The case has been ongoing for five years and involved millions of pages of documents with 23 lawyers representing the plaintiffs, whose fees and expenses -- plus a contingency award -- will be paid from the settlement. Stipulation of Settlement at https://www.microfocusclassaction.com

Members report that payouts were received in Nov 2024.

Why two waves of notices? On Sep 1, 2017. the MFGP shares derived from Employee Stock Purchase shares registered at HPE's transfer agent (Wells Fargo Shareowner Services, now Equiniti) were registered at AST (American Stock Transfer) -- the US transfer agent for Micro Focus. The MFGP shares related to other accounts -- such as HP incentive plan accounts or personal brokerage accounts -- were placed in each corresponding account.

What is the April 2019 change from "A" to "B" shares?  (The "return of value" transaction.) (For each ADS share of MFGP owned on Apr 30, 2019, stockholders received 0.8296 "B" share of MFGP plus $4.30 cash.) See: Micro Focus Stock

Who sued whom? In 2018, five investors and a pension fund sued Micro Focus, HPE, and several individuals -- the Micro Focus CEO, CFO, and board members, former HPE Software EVP Christopher Hsu, and HPE General Counsel and Secretary John Schultz -- alleging that they "...misrepresented and omitted material facts in the registration statements and prospectus..." Settlement Notice at https://www.microfocusclassaction.com

Anything illegal happen? "Defendants deny that they have violated any aspects of the securities laws of the United States, and there has been no finding of liability or wrongdoing by, on the part of, or against, any Defendant... This notice is not intended to express any opinion by the Court with respect to the truth of the allegations..." Settlement Notice

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