Softcat plc (LON:SCT) experienced a notable share price decline on Friday, closing at 1,895 pence, a drop of 3.71% on volume of 4.11 million shares. This market reaction followed the company's announcement of its largest-ever acquisition, the purchase of U.S.-based GDT for $1.05 billion.
The closing price sits just five pence above the 1,890 pence per share placing price, indicating that investors have quickly factored in the financing but have not awarded the deal a premium. This narrow gap suggests a swift institutional reassessment of the transaction's value.
Transaction Details and Financial Impact
Softcat successfully raised approximately £354 million gross through an equity placing, with net proceeds of £345 million. The funding package also includes £100 million of existing cash and £550 million in new debt facilities. The equity issue introduced 18.74 million new shares, representing a 9.5% increase in the company's share count.
The acquisition marks a significant shift in Softcat's capital structure, moving from a net cash position of 0.7 times to a projected net debt of 1.3 times at closing. Management has indicated that it expects to reduce this leverage below 1.0 times by July 2028.
GDT's Financial Profile
GDT, which serves approximately 700 enterprise and upper-midmarket customers in networking, data centres, and cybersecurity, is projected to generate around $240 million in gross profit and $80 million in EBITDA for 2026. Based on these figures, the transaction price represents a 13.1 times EBITDA multiple, according to TS2 calculations.
However, GDT reported a net loss of $58.4 million in 2025, which may raise concerns about the company's profitability trajectory. Softcat's management anticipates high-single-digit to low-double-digit underlying earnings per share accretion in the first full fiscal year post-completion.
Market Reaction and Volume
Friday's trading volume of 4.11 million shares was 15.3 times higher than Thursday's total, indicating a one-day institutional reset rather than a routine market drift. The stock's performance over the past week shows a decline from 1,916 pence on September 16 to 1,895 pence on September 18.
The deal was accompanied by an upgraded trading outlook. Softcat now expects high-teens underlying operating profit growth for FY2026, up from a mid-teens view. Cash conversion is forecast to land near the top of its 85% to 95% range. Excluding GDT, the company projects high-single-digit underlying operating profit growth for FY2027.
Analyst Perspectives and Risks
The analyst community remains divided on Softcat's prospects. Jefferies has issued a Hold rating with a price target of 1,700 pence, implying a 10.3% downside from Friday's close. Conversely, JPMorgan maintains a Buy rating with a target of 2,300 pence, suggesting 21.4% upside. Deutsche Bank and UBS both hold Hold ratings with targets of 2,140 and 2,000 pence, respectively.
Key risks include potential delays in regulatory closing, integration challenges that could miss promised accretion targets, and adverse currency movements that could increase the effective purchase cost. The new shares are expected to begin trading on September 22, and Softcat's preliminary results on October 14 will provide the next major test of its cash conversion and revised profit outlook.
