Information technology services firm Coforge on December 26 announced its plan to acquire US-based engineering services company Encora in a $2.35 billion all-stock transaction. Consequently, the company will execute the acquisition through a share swap, under which Coforge will issue 93.8 million equity shares priced at Rs 1,815.91 each, implying a non-cash consideration of approximately Rs 17,032 crore.
Following the transaction, Encora shareholders will hold nearly 21.25 percent of Coforge’s post-issue equity capital. As a result, the deal will significantly reshape Coforge’s shareholder base while preserving its capital structure.
“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,” the company said in a release issued after the conclusion of its board meeting. Therefore, the acquisition positions Coforge to accelerate its AI-driven growth strategy.
Earlier reports indicated that Coforge had been in advanced discussions to acquire Encora, potentially making this one of the largest transactions in the digital engineering space. Moreover, the company stated that the transaction will result in a combined entity with projected revenue of around $2.5 billion, with close to $2 billion expected from AI-led engineering, cloud, and data services by FY27. Additionally, AI-led product engineering alone could scale to over $1.25 billion in revenue, while cloud services may contribute about $500 million and data engineering more than $250 million.
To fund the acquisition, Coforge will deploy equity worth $1.89 billion, while it will meet the remaining amount through a bridge loan or a qualified institutional placement to retire Encora’s existing term loan. Meanwhile, Coforge’s board has approved plans to raise up to $550 million through a QIP or other permitted routes, although the company noted that it may not trigger a QIP if it finalizes alternative funding options.
Strategically, the deal will immediately scale Coforge’s HiTech and Healthcare verticals, with each expected to achieve a run rate of approximately $170 million post-acquisition. Furthermore, Encora adds AI-led healthcare capabilities across pharma, medtech, and healthtech. It also brings 11 client relationships generating more than $10 million annually, thereby increasing the combined total to 45 such large accounts.
In addition, the acquisition strengthens Coforge’s nearshore delivery footprint, as Encora contributes more than 3,100 professionals across Latin America. At the same time, the transaction expands Coforge’s presence in the US West and Midwest markets.
Looking ahead, Coforge expects its North America business to grow by nearly 50 percent to over $1.4 billion following the completion of the deal. Encora is being acquired from private equity investors, including Advent International and Warburg Pincus, who will roll over their existing holdings into Coforge equity.
As part of the agreement, these investors will gain the right to appoint two nominee directors to Coforge’s board and secure representation on key committees. However, the company clarified that the transaction will not result in any change in control.
The acquisition remains subject to shareholder and regulatory approvals, including clearances from the Reserve Bank of India and overseas antitrust authorities. Accordingly, Coforge expects to complete the transaction within the next four to six months.
