Please ensure Javascript is enabled for purposes of website accessibility

Why Zayo Group Stock Jumped 14.6% in March

By Steve Symington – Updated Apr 9, 2019 at 6:01PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The internet services provider is reviewing strategic alternatives. Here's what investors need to know.

What happened

Shares of Zayo Group (ZAYO) climbed 14.6% in March, according to data from S&P Global Market Intelligence, after the communications infrastructure company postponed its annual report to give its board time to "evaluate strategic alternatives that may enhance shareholder value."

To be sure, Zayo Group stock jumped more than 12% on March 6 alone, after it issued a press release to that effect, with Chairman and CEO Dan Caruso adding that the company will remain focused on building its fiber infrastructure "whether public or private."

Chess board with black pieces on left, white pieces on right, and a black and white pawn in the center


So what

Zayo didn't provide a specific timetable for this evaluation but rather suggested it could take "a minimum of several weeks to months" to complete the process. Zayo also insisted it won't comment further on the situation unless it deems it appropriate or legally required as part of its disclosures to investors. To that end, the following day the company did issue a diplomatic response (albeit containing no significant new information) to a letter from Starboard Value in which the activist hedge fund urged Zayo to sell itself. 

Now what

Barring an update between now and Zayo's fiscal third-quarter 2019 report scheduled for May 9, investors will need to hurry up and wait for more color on the situation. But considering the chance for an acquisition premium to bolster their returns, it was hard to blame the market for bidding up Zayo stock last month.

Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends Zayo Group. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.