Information technology (IT) services firm Coforge, on December 26 said it will acquire US-based engineering services company Encora in a $2.35-billion all-stock transaction, confirming Moneycontrol's newsbreak.
The acquisition will be executed through a share swap, under which Coforge will issue 93.8 million equity shares at Rs 1,815.91 apiece, implying a non-cash consideration of about Rs 17,032 crore.
Encora shareholders will hold about 21.25 percent of Coforge’s post-issue equity capital.
"Coforge's acquisition of Encora will create a $2.5 billion Tech Services powerhouse with both the scale and capability across AI-led engineering, Cloud, and Data services to drive enterprise-grade AI-solutions," a release by the company read after it concluded its board meeting.
Earlier, Moneycontrol exclusively reported that Coforge is in advanced discussions to acquire Encora, potentially marking one of the largest transactions in the digital engineering space, citing sources.
The company further said the transaction will create a combined entity with projected revenue of about $2.5 billion, with nearly $2 billion expected to come from AI-led engineering, cloud, and data services by FY27. Adding that AI-led product engineering alone could scale to over $1.25 billion in revenue, with cloud services contributing about $500 million and data engineering over $250 million.
Also, read: Coforge shares slip in early trade as $1-billion Encora deal talk, fundraising plans weigh
Encora Fundamentals
Encora, founded in Silicon Valley, reported consolidated revenue of $516 million in FY25 and is projected to reach $600 million in FY26, with an adjusted EBITDA margin of 19 percent. Coforge said the combined business is expected to operate at an EBIT margin of about 14 percent after amortisation of intangibles, and the deal is not expected to be earnings dilutive.
What will be the funding mix?
The acquisition will be funded through equity worth $1.89 billion, with the balance to be met through a bridge loan or a qualified institutional placement to retire Encora’s existing term loan.
Coforge’s board has approved raising up to $550 million via a QIP or other permitted routes, though the company said a QIP may not be triggered if alternative funding options are finalised.
How will the acquisition help Coforge
Coforge said the deal will immediately scale its HiTech and Healthcare verticals, each expected to reach a run-rate of about $170 million post-acquisition. Encora adds AI-led healthcare solutions spanning pharma, medtech, and healthtech, along with 11 client relationships generating over $10 million annually, taking the combined total to 45 such accounts.
The acquisition also strengthens Coforge’s nearshore delivery footprint, with Encora bringing over 3,100 professionals across Latin America, and expands the company’s presence in the US West and Midwest.
Coforge said its North America business is expected to grow by about 50 percent to over $1.4 billion following the transaction.
Encora is being acquired from private equity investors including Advent International and Warburg Pincus, who will roll over their holdings into Coforge equity.
The investors will have the right to appoint two nominee directors to Coforge’s board and representation on key committees, though the company said there will be no change in control.
The transaction is subject to shareholder and regulatory approvals, including from the Reserve Bank of India and overseas antitrust authorities, and is expected to close within four to six months.
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