Coforge is buying Encora, a US-based AI and digital engineering firm, for $2.35 billion in an all-stock transaction. The deal ranks as the second-largest acquisition ever by an Indian IT services company and the largest in the engineering R&D segment, according to Business Standard.
The structure: Coforge issues 93.8 million shares at 1,815.91 rupees each, a 14.5% premium to Friday's close. Encora's shareholders, led by private equity firms Advent International and Warburg Pincus, end up with roughly 20% of the combined company. No cash changes hands, though Coforge may raise up to $550 million separately to retire Encora's existing debt.
Encora posted $516 million in revenue in FY25 and projects $600 million for FY26, with EBITDA margins around 19% (company-reported figures). CEO Sudhir Singh called it "a defining moment" for Coforge, claiming the combined entity will hit $2.5 billion in annual revenue. That's optimistic, but Singh has a track record: Coforge grew 32% last year to $1.34 billion after its Cigniti acquisition.
The deal adds 3,100 employees across Latin America and expands Coforge's footprint in the US West and Midwest, where it was underweight. The combined firm will have 45 client relationships generating over $10 million annually. Expected close: four to six months, pending regulatory approvals.
The Bottom Line: Coforge leapfrogs Persistent, Mphasis, and Hexaware to become India's seventh-largest IT firm, betting that AI engineering is where the growth is.
QUICK FACTS
- Enterprise value: $2.35 billion (all-stock, no cash)
- Equity value: $1.89 billion via share issuance
- Encora FY26 projected revenue: $600 million (company estimate)
- Post-deal Encora shareholder stake: ~20% of Coforge
- Expected close: 4-6 months
- Sellers: Advent International, Warburg Pincus
