Coforge has announced the acquisition of Encora, a technology services firm specializing in AI-native solutions, for US$2.35 billion. This acquisition will establish Coforge as a US$2.5 billion tech services powerhouse, enhancing its capabilities in AI-led engineering, data, and cloud services. Encora’s expertise will accelerate Coforge’s industry-leading growth and solidify its position in the AI-infused future of enterprise technology.
Strategic Acquisition of Encora
Coforge is set to acquire Encora, a move that will significantly enhance its AI and cloud service offerings. This positions Coforge as a leader in the next generation of enterprise technology, where AI, Cloud, and Data converge to drive enterprise reinvention. Coforge believes this acquisition marks a defining moment for the organization.
Rationale Behind the Acquisition
The acquisition is driven by the imperative to establish a scaled AI-led Engineering, Data, and Cloud services capability. This is expected to accelerate Coforge’s industry-leading growth and position it as a tech services firm ready to deliver on the promise of an AI-infused future. The acquisition is highly synergistic and is expected to yield substantial benefits in the coming years.
Key Synergies and Financial Impact
The combined entity is projected to achieve US$2 billion in revenue from AI-led engineering, data, and cloud services by FY’27. Specifically:
Impact on Industry Verticals
Coforge’s HiTech and Healthcare verticals are poised for immediate growth post-acquisition. The HiTech vertical is expected to achieve a US$170Mn+ run-rate, while the Healthcare vertical will also reach US$170Mn+. Encora brings new AI-led solutions to the healthcare sector, including AI-Biomed Research Assistant and AI-Enabled Patient Guardian.
Nearshore Delivery Capability
The acquisition will reposition Coforge with a scaled-up nearshore delivery capability in LATAM. Encora has a significant presence in LATAM, with over 3100 delivery team members. This will allow Coforge to better service its US clients and expand its reach.
Expanded US Client Footprint
The acquisition will significantly expand Coforge’s client footprint in the West and Mid-West regions of the US. Coforge’s North America business is expected to increase by approximately 50%, reaching US$1.4Bn+ post-acquisition.
Financial Details of the Transaction
Coforge has signed a definitive agreement to acquire 100% of Encora’s shares. The enterprise value of the transaction is US$2.35Bn. The acquisition is financed through a combination of equity and debt. Encora shareholders will hold approximately 20% of Coforge’s shares.
Financial Performance Expectations
The consolidated turnover of Encora Group for FY26E is projected to be US$600Mn, with an Adjusted EBITDA of 19%. With Encora’s margin profile and anticipated synergies, the combined business is expected to operate at an EBIT margin of 14% post-amortization of intangibles.
Source: BSE
