IT player Coforge's shares gained in trade on June 26 after the Competition Commission of India (CCI) approved the firm's acquisition of stake in Cigniti Technologies.
According to the proposal, the company will acquire at least 50.21 percent and up to 54 percent of Cigniti Technologies on a fully diluted basis, CCI said in a statement.
Coforge's board had approved the acquisition on May 2, 2024, at Rs 1,415 per share of Cigniti Tech.
At 10.20 am, shares of Coforge were quoting Rs 5,381 on the NSE, higher by 0.57 percent. Cigniti Technology's stock price was higher by nearly a percent at Rs 1,357 apiece.
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According to Coforge, the acquisition of Cigniti will not only help the firm grow into a $2 billion firm by FY27, but also the ensuing synergies will ensure that the Coforge operating margins shall improve by 150 – 250 bps in that timeframe too.
The acquisition of Cigniti enables Coforge to scale up and create three new verticals – retail, hi-tech and healthcare.
The merged firm’s retail vertical will be operating at close to $100 million per annum, while the hi-tech and healthcare verticals will be operating at around $50 million per annum size immediately post-merger, said Coforge.
"Coforge currently derives only 48 percent of its global revenues from its North American operations because it’s presence has largely been East Coast-centric in the USA. Rapid expansion in North America has been a key objective for Coforge.
"The acquisition of Cigniti will expand Coforge’s North America revenue by ~33 percent and help us establish a significant beachhead in the crucial West, South-West and Mid-West markets," said the company.
Over the past year, Coforge shares have risen around 15 percent in trade, underperforming the key benchmark Nifty 50 index, that has jumped around 25 percent during the same time.
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