Coforge is set to acquire Encora, a technology services firm, in a share swap transaction valued at $2.35 billion. The deal involves Coforge issuing equity shares to Encora’s shareholders, making them hold approximately 20% of Coforge. This acquisition will create a $2.5 billion tech services powerhouse, strengthening Coforge’s capabilities in AI-led engineering, data, and cloud services. The transaction is expected to close within 4 to 6 months.
Acquisition Overview
Coforge will acquire 100% of Encora’s shares from Advent International, Warburg Pincus and other minority shareholders. This acquisition is valued at $2.35 billion, through equity of $1.89 billion and balance through bridge loan.
Strategic Rationale
The acquisition is expected to accelerate Coforge’s growth and establish it as a leader in AI-led engineering, data, and cloud services. The combined entity is projected to become a $2.5 billion tech services powerhouse. It is expected to generate nearly $2 billion in revenue in FY’27 from enterprise AI-led engineering, cloud and data services.
Key Benefits and Synergies
The acquisition will scale Coforge’s HiTech and Healthcare verticals and will expand its nearshore delivery capabilities in LATAM and client footprint in the US West and Midwest. Encora adds eleven US$10Mn+ tenured client relationships. Coforge anticipates it can successfully apply its experience to growing the acquired client relationships with strong cross-selling strategies.
Financial Details
The transaction will be financed through equity of $1.89 billion and a bridge loan or Qualified Institutional Placement (QIP) of up to US$550 million to retire Encora’s debt. The sellers will roll over their equity into Coforge and will not be taking any cash considerations. The revenue run rate of the acquired company for FY 2024-2025 is at USD 516 Mn.
Terms of the Agreement
Coforge will issue up to 9,37,96,508 equity shares at a price of INR 1,815.91 per share to Encora’s investors. After the preferential issue, investors will be allotted the equity shares with post merger stake. As part of this arrangement Coforge has proposed to increase authorized share capital from INR 77,00,00,000/- to INR 1,02,00,00,000/-
Timeline and Approvals
The transaction is expected to close within 4 to 6 months, pending shareholder and regulatory approvals. Shareholder approval is expected within 30 days of signing. There may be a QIP issued in this transaction, but all funding options remain open at this time.
Source: BSE
