Coforge to acquire Encora for $2.35 bn, boosting AI and engineering services

Coforge Limited's board of directors approved the acquisition of Encora US Holdco, Inc. and Encora Holdings Ltd. for an enterprise value of $2.35 billion. The transaction will be financed through an equity value of $1.89 billion via a preferential allotment of shares and a bridge loan or Qualified Institutional Placement (QIP) of up to $550 million. The preferential issue involves 93,796,508 equity shares of Coforge at an issue price of INR 1,815.91 per share, totaling INR 1,70,32,60,16,842.

This strategic acquisition, expected to close in 4 to 6 months pending regulatory and shareholder approvals, positions Coforge as a leader in AI-led engineering services. It is projected to create a combined entity with a $2.5 billion tech services powerhouse, with nearly $2 billion in revenue expected from AI-led engineering, cloud, and data services by FY'27. Encora's consolidated turnover for FY24 and FY25 was $481 million and $516 million, respectively.

The acquisition is an all-stock deal with sellers, including Advent International and Warburg Pincus, rolling over their stake into Coforge, resulting in Encora shareholders holding approximately 20% of Coforge's shares. This is expected to be EPS non-dilutive due to Encora's strong margin profile and anticipated business synergies.