Coforge Acquires Encora in $2.35 Billion All-Stock Deal

Introduction

Coforge Ltd. has announced a definitive agreement to acquire US-based artificial intelligence (AI) firm Encora in a landmark transaction valued at an enterprise value of $1.35 billion. The move, approved by Coforge's board on December 26, 2025, is set to create a $1.5 billion technology services powerhouse with a sharp focus on AI-led engineering, cloud, and data services. This strategic acquisition positions Coforge to capitalize on the growing enterprise demand for scalable AI solutions.

Details of the All-Stock Transaction

The acquisition is structured as an all-stock deal, where Encora's existing shareholders, including private equity firms Advent International and Warburg Pincus, will roll over their investment into Coforge. Coforge will issue 9,37,96,508 new equity shares at a price of ₹1,815.91 per share, resulting in an equity consideration of approximately $1.89 billion (₹17,032.60 crore). Following the completion of the transaction, Encora's shareholders will hold approximately 21% of the combined entity's equity. The issue price represents an 8.5% premium over the previous day's closing price, signaling confidence in the synergistic value of the deal.

Financing and Capital Structure

To support the transaction, Coforge's board has approved several financial measures. A key component is a plan to raise up to $150 million through a Qualified Institutional Placement (QIP) or a bridge loan. These funds are not being paid to Encora's sellers. Instead, the capital will be used to retire an existing term loan on Encora's books, effectively deleveraging the acquired company. The board also approved an increase in Coforge's authorized share capital from ₹77 crore to ₹102 crore to accommodate the new share issuance.

Strategic Vision: A New AI-Led Powerhouse

The primary driver behind this acquisition is the strategic imperative to build a global leader in AI-led digital engineering. Encora brings deep, AI-native capabilities and a strong presence in the US market. The company operates at the intersection of cloud, data, and AI, offering services like agent-native product engineering and AIOps. Encora has developed its own composable AI platform, AIVA™, which allows organizations to build intelligent workflows. Coforge CEO Sudhir Singh stated that the combined entity will be well-positioned to move beyond pilot AI projects and deliver enterprise-grade AI systems embedded into core business processes.

Encora's Profile and Capabilities

Headquartered in California, Encora is a software engineering services provider catering to digital-native companies and Fortune 1000 enterprises. The company has a strong nearshore delivery presence, with over 3,100 professionals in Latin America serving US clients. In fiscal year 2025, Encora reported a turnover of $116 million with an adjusted EBITDA margin of around 19%. Its expertise and client base are expected to significantly bolster Coforge's offerings, particularly in the high-tech and healthcare verticals.

Market Impact and Financial Outlook

The acquisition is projected to have a transformative impact on Coforge's scale and market position. The company's North America business is expected to expand by 50% to over $1.4 billion. The deal also adds 11 tenured client relationships, each generating over $10 million in annual revenue, bringing the combined entity's total of such large clients to 45. Management projects that the combined business will operate at an EBIT margin of approximately 14% after accounting for the amortization of intangibles. Despite the significant equity issuance, the deal is expected to be accretive to earnings per share (EPS) due to Encora's strong margin profile and anticipated synergies. The company has set an ambitious target to generate nearly $1 billion in revenue from AI-led engineering, cloud, and data services by fiscal year 2027.

Key Transaction Metrics

Here is a summary of the key financial and structural details of the acquisition:

Path to Completion

The transaction is subject to customary closing conditions, including shareholder approval and various regulatory clearances. These include approvals from the Reserve Bank of India (RBI), clearance under the Hart-Scott-Rodino Act in the US, and antitrust approvals in other jurisdictions like Australia. The entire process is expected to be completed within four to six months.

Conclusion

Coforge's acquisition of Encora is a bold, strategic move designed to redefine its position in the global IT services landscape. By integrating Encora's AI-native engineering talent and platforms, Coforge is not just scaling its operations but fundamentally enhancing its capabilities to meet the next wave of enterprise technology demand. This transaction creates a formidable competitor in the high-growth digital engineering space and sets a clear trajectory for Coforge to become a dominant player in delivering enterprise-grade AI solutions.