Coforge has announced its acquisition of Encora, a technology services firm, in a share swap transaction valued at approximately $2.35 billion. The deal will be financed through a mix of equity and debt, with existing Encora shareholders receiving approximately 20% ownership in Coforge. This acquisition aims to establish Coforge as a leader in AI-led engineering and expand its presence in key markets and verticals. The transaction is expected to close within 4 to 6 months, subject to regulatory approvals.
Strategic Acquisition of Encora
Coforge is set to acquire Encora, a technology services firm specializing in AI-native solutions, for an enterprise value of $2.35 billion. The acquisition will be executed through a share swap, with Coforge issuing new equity shares to Encora’s current shareholders.
Deal Rationale
This acquisition aims to position Coforge as a leader in AI-led engineering, data, and cloud services. The combined entity is projected to reach $2.5 billion in revenue. Encora brings a strong AI-native DNA and a composable agentic platform (AIVA), which is expected to enhance Coforge’s capabilities and drive further growth. The deal will also significantly scale Coforge’s HiTech and Healthcare verticals. Revenue of nearly $2 Billion is expected to accrue from the enterprise core of AI-led engineering, cloud, and data services alone by the Financial Year 2027.
Financial Details and Structure
The acquisition will be financed through equity of $1.89 billion, paid via preferential allotment, and a bridge loan or Qualified Institutional Placement (QIP) of up to $550 million to retire existing debt within the Encora Group. Existing shareholders of Encora will hold approximately 20% of Coforge’s shares after the transaction. The consideration has been agreed at a share price of Rs 1815 per share.
Anticipated Synergies
Coforge anticipates significant revenue synergies and margin improvements from the acquisition. The combined business is expected to operate at an EBIT margin of 14% post-amortization of intangibles. Coforge anticipates eleven US$10Mn+ tenured client relationships with its top 10 client relationship tenures averaging 10+ years.
Approvals and Timeline
The transaction is subject to shareholder and regulatory approvals, including those from the Reserve Bank of India and US authorities. Closing is expected within 4 to 6 months. A shareholder’s approval will be secured within 30 days of signing.
Capital Raise and Related Approvals
To facilitate the transaction, Coforge’s board has approved raising capital via Qualified Institutions Placement (QIP) or other permitted means, for up to $550 million. The board has also approved an increase in limits under Section 186 of the Companies Act, 2013, and the issuance of notice and postal ballot to the company’s members. The Board also approved the increase in authorized share capital from INR 77,00,00,000/- to INR 1,02,00,00,000/-.
Source: BSE
