Coforge is acquiring US-based tech company Encora at an enterprise value of $2.35 billion. In an exchange filing, the Indian IT said that it has signed a definitive agreement with Encora’s majority shareholder, Warburg Pincus and Advent International, to acquire a 100 per cent stake in an all-stock deal.
Coforge will pay $1.89 billion in the form of equity through preferential allotment to Encora’s stakeholders. This will result in Encora’s stakeholders, Warburg Pincus and Advent International and other minority shareholders acquiring about 20 per cent stake in Coforge.
Additionally, the remaining cost will be financed through a bridge loan or Qualified Institutional Placement (QIP) of $550 million to retire the term loan in Encora.
Coforge added in the exchange disclosure that the shareholder’s approval will be secured within 30 days of signing, while the regulatory approvals are expected within 4 to 6 months of signing.
Encora business and acquisition rationale
Coforge said that Encora’s acquisition 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 stated that Encora has eleven tenured client relationships exceeding $10 million, with its top 10 client relationships lasting for 10 years or more. Encora has a large and widespread near-shore delivery capability with 3100+ delivery team strength in its LATAM Delivery centres, Coforge added.
In the exchange disclosure, Coforge stated that Encora’s consolidated turnover in FY24 and FY25 was $481 million and $516 million, respectively. The Silicon Valley company’s turnover in FY26 is estimated to reach $600 million in FY26.
“With Encora’s current margin profile, and the anticipated synergies in the business, the combined business is expected to operate at an EBIT margin of 14% post amortization of intangibles that will be created as part of the purchase price allocation for this acquisition.” Coforge said in the statement.