GTT Communications, Inc. (GTT) Accused of Misleading Investors
According to the complaint, for alleged violations of the Securities Exchange Act of 1934 between February 26, 2018 and July 1, 2019, GTT announced a $2.3 billion deal to acquire Interoute Communications Holdings S.A., starkly contrasting its strategy of acquiring smaller companies in “tuck-in acquisitions.” GTT assured that the two companies fit together almost “hand in glove” and that GTT’s global IP network would expand to be “one of Europe’s most extensive fiber footprints.” These assurances were further supported in a series of statements from GTT, touting that the integration was “on track” and ” meaningful progress,” positioning GTT “to achieve next financial objective of $2 billion in revenue.” However, these positive statements proved to be materially false when, in May 2019, GTT reported a 1% decline in revenue and an increase of $25.7 million in net losses. In its explanation for the disappointing financial results, GTT revealed that the declining business was due to challenges and delays in its integration of Interoute. Since this news, GTT’s stock has declined more than 50% and currently trades under $12.00.