IT services firm Coforge on December 26 announced the acquisition of US-based engineering services company Encora in a $2.35-billion all-stock transaction.
The acquisition will be carried out through a share-swap arrangement, under which Coforge will issue 93.8 million equity shares priced at ₹1,815.91 per share, translating into a non-cash consideration of approximately ₹17,032 crore. Following the transaction, Encora’s shareholders will hold around 21.25% of Coforge’s expanded equity capital.
In a statement released after its board meeting, Coforge said the deal would create a $2.5-billion technology services company with enhanced scale and capabilities across AI-led engineering, cloud, and data services, enabling the delivery of enterprise-grade AI solutions.
Strategic Rationale and Financial Impact
The combined entity is projected to generate around $2.5 billion in revenue, with nearly $2 billion expected from AI-led engineering, cloud, and data services by FY27. Coforge said AI-led product engineering alone could scale to over $1.25 billion, while cloud services and data engineering are expected to contribute about $500 million and $250 million, respectively.
Encora, founded in Silicon Valley, reported $516 million in consolidated revenue in FY25 and is projected to reach $600 million in FY26, with an adjusted EBITDA margin of 19%. Post-acquisition, the combined business is expected to operate at an EBIT margin of around 14% after amortisation of intangibles, and the deal is not expected to be earnings dilutive, the company said.
Funding Structure
The transaction will be funded through equity worth $1.89 billion, with the remaining portion to be met via a bridge loan or a qualified institutional placement (QIP) to refinance Encora’s existing term loan.
Coforge’s board has approved plans to raise up to $550 million through a QIP or other permissible routes, although the company noted that a QIP may not be required if alternative funding options are finalised.
Business Expansion and Market Presence
Coforge said the acquisition will immediately strengthen its HiTech and Healthcare verticals, each expected to achieve a run rate of about $170 million post-transaction. Encora brings AI-driven healthcare solutions across pharma, medtech, and healthtech, along with 11 client relationships generating over $10 million annually, taking the combined total to 45 large accounts.
The deal also enhances Coforge’s nearshore delivery capabilities, with Encora contributing over 3,100 professionals across Latin America, and expands the company’s footprint in the US West and Midwest. Following the acquisition, Coforge’s North America revenue is expected to rise by around 50% to over $1.4 billion.
Ownership and Approvals
Encora is being acquired from private equity investors Advent International and Warburg Pincus, who will roll over their holdings into Coforge equity. The investors will have the right to nominate two directors to Coforge’s board and representation on key committees, although the company said there will be no change in control.
The transaction is subject to shareholder and regulatory approvals, including clearance from the Reserve Bank of India and overseas antitrust authorities, and is expected to be completed within four to six months.
