Synopsis : Coforge has signed a landmark $2.35-billion all-stock deal to acquire US-based digital engineering firm Encora, marking one of the largest overseas acquisitions by an Indian mid-tier IT company. The move signals a decisive pivot toward AI-led engineering, data, and cloud-driven growth.
Indian IT services firm Coforge on Friday announced a definitive agreement to acquire Encora, a US-based digital engineering leader, in an all-stock transaction valued at $2.35 billion (around ₹21,140 crore). The deal stands out as one of the biggest overseas acquisitions by an Indian mid-tier IT player and underscores Coforge’s ambition to build scale in high-value, AI-led digital services.
Under the agreement, Coforge will acquire 100% of Encora from private equity investors Advent International, Warburg Pincus, and other minority shareholders. Encora’s equity value has been pegged at approximately $1.89 billion (₹17,000 crore), while the remaining $550 million (₹4,100 crore)—representing the gap between equity and enterprise value—will be used to retire Encora’s existing term loan.
The transaction will be executed entirely through a share swap, with no cash payout to selling shareholders. Coforge will issue about 93.8 million equity shares at an issue price of ₹1,815.91 per share, reflecting a premium of roughly 8.5% to its previous closing price. Post-acquisition, Encora’s shareholders will collectively own around 20–21% of Coforge’s expanded equity base.
To fund the debt repayment, Coforge’s board has approved raising up to $550 million via a Qualified Institutional Placement (QIP) or other permissible routes, though the company noted that alternative funding options could eliminate the need for equity dilution.
“This reflects the confidence that the incoming shareholders have in the prospects of the expanded firm,” Coforge said in its exchange filing, adding that the combined entity is projected to generate annual revenue of about $2.5 billion (₹22,500 crore).
Building a $2-Billion Digital Core
Encora, headquartered in the US with delivery centres across Latin America, reported FY25 revenue of $516 million and is expected to reach around $600 million in FY26, operating at an adjusted EBITDA margin of nearly 19%. Coforge stated that the deal is not expected to be EPS-dilutive, supported by Encora’s profitability and anticipated synergies. Post-acquisition, the combined entity is expected to operate at an EBIT margin of around 14%, after accounting for amortisation of intangibles.
The acquisition significantly boosts Coforge’s digital capabilities. AI-led engineering, data, and cloud services are projected to contribute nearly $2 billion in revenue by FY27, with AI-led product engineering alone expected to exceed $1.25 billion, cloud services about $500 million, and data engineering over $250 million.
Beyond scale, Coforge described the deal as a capability leap, particularly in high-value digital engineering at a time when traditional outsourcing demand is slowing. Encora adds strong expertise in software, healthcare, and fintech, along with a robust near-shore delivery model.
Geographic Rebalancing and Client Expansion
The acquisition also strengthens Coforge’s client profile. The combined entity will have 45 clients generating over $10 million annually, with Encora contributing 11 such relationships. Coforge noted that Encora’s top 10 clients have an average relationship tenure exceeding a decade.
Geographically, Coforge’s North America revenue is expected to grow by about 50% to over $1.4 billion, supported by Encora’s strong presence in the US West and Midwest and a near-shore workforce of over 3,100 professionals in Latin America.
Encora’s investors will roll over their holdings into Coforge equity and gain the right to nominate two directors to Coforge’s board, though the company clarified 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. Coforge expects shareholder approval within 30 days, with deal closure targeted in four to six months.
Disclaimer : This article is for informational purposes only and does not constitute financial or investment advice. Readers are advised to conduct their own research or consult a qualified professional before making any investment decisions.
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