Coforge to acquire AI firm Encora for USD 2.35 bn in all-stock deal

New Delhi, Dec 26 (PTI) IT services firm Coforge on Friday said it will acquire 100 per cent stake in Silicon Valley-based AI firm Encora for an enterprise value of USD 2.35 billion (about Rs 21,133 crore).

The acquisition will be funded through an all-stock transaction. Coforge will issue preferential shares worth about USD 1.89 billion to Encora's current shareholders, including private equity giants Advent International and Warburg Pincus. Upon completion, the sellers will hold a 20 per cent stake in the expanded share capital of Coforge.

"Coforge has signed a definitive agreement to acquire 100 per cent shares of Encora from Advent International, Warburg Pincus and other minority shareholders. The enterprise value of the transaction is USD 2.35 billion," Coforge said in a regulatory filing.

Coforge CEO and Executive Director Sudhir Singh said the acquisition establishes a scaled AI-led engineering capability moat for Coforge, underpinned by capabilities to help create enterprise data cores and cloud foundations purpose-built for AI.

Encora, an AI-native firm providing software engineering services, is projected to report a revenue of USD 600 million for FY26 with an adjusted EBITDA margin of approximately 19 per cent.

"Coforge's acquisition of Encora will create a USD 2.5 billion tech services powerhouse wherein AI-led engineering + Data + Cloud services alone are likely to deliver USD 2 billion revenue in FY27. AI-led product engineering business is likely to be a USD 1.25 billion+ business, Cloud services a USD 500 million business, and Data engineering a USD 250 million+ business for the firm.

"Furthermore, Hi-Tech and Healthcare industry verticals of Coforge are expected to reach material scale immediately post-acquisition. They will both individually operate at an annualised USD 170 million+ revenue run rate," Coforge said.

According to the company filing, the transaction will also involve a bridge loan or a qualified institutional placement of up to USD 550 million to retire Encora's existing debt.

The deal has been agreed at a share price of Rs 1,815 per share, representing an 8.5 per cent premium to Friday's close. PTI ANK TRB