Coforge has agreed to acquire 100% of Encora from Advent International and Warburg Pincus in a deal valued at $2.35 billion. The acquisition, financed through equity and debt, will position Coforge as a leader in AI-led engineering, data, and cloud services. Encora’s shareholders will hold approximately 20% of Coforge after the deal. The transaction is expected to close in 4 to 6 months, subject to regulatory approvals.
Strategic Acquisition
Coforge is set to acquire Encora, a technology services firm, for an enterprise value of $2.35 billion. This acquisition will be financed through a mix of equity ($1.89 billion in equity shares) and debt. The transaction aims to enhance Coforge’s capabilities in AI-led engineering and related services.
Deal Highlights
Key aspects of the acquisition include:
- Encora’s shareholders to hold around 20% of Coforge post-acquisition.
- Financing through $1.89 billion equity and up to $550 million bridge loan or QIP.
- The acquisition is an all-stock deal.
- Shareholder approval is expected within 30 days of signing.
- Regulatory approvals are anticipated within 4 to 6 months of signing.
Rationale for Acquisition
The acquisition of Encora is expected to provide Coforge with the following strategic advantages:
- Enhanced capabilities in AI-led Engineering, Data and Cloud services.
- Expected revenue of $2 billion in FY’27 from AI-led engineering, cloud and data services.
- Increased scale in HiTech and Healthcare verticals.
- Expanded nearshore delivery capabilities in LATAM.
- Increased client footprint in the US West and Midwest.
Financial Details
The consolidated turnover of Encora Group for FY26E is projected to be $600 million, with an Adjusted EBITDA of 19%. In FY24 and FY25, the consolidated turnover was $481 million and $516 million, respectively.
Special Rights and Board Representation
As part of the acquisition agreement, Encora’s investors will be granted special rights, including the right to appoint two nominee directors to the Coforge board and representation on key committees.
Capital Raise
To finance the acquisition, Coforge is considering raising capital through a qualified institutions placement (QIP) or other permissible means, up to an aggregate amount not exceeding USD 550 Mn.
Source: BSE
