 "Coforge to buy AI firm Encora for $2.35 billion in all-stock deal")
Midcap information technology (IT) services company Coforge will acquire Silicon Valley-based artificial intelligence (AI) firm Encora for $2.35 billion in an all-stock deal — the largest takeover by an Indian IT company in the engineering research and development (ER&D) segment.
The transaction is the fourth-largest ER&D deal globally and the second-largest acquisition by an Indian IT services company ever. It is expected to significantly strengthen Coforge’s artificial intelligence capabilities while expanding its geographic footprint.
The Noida-headquartered company will acquire the business from Advent, Warburg Pincus and other minority shareholders. Coforge will fund the $1.89 billion equity value of the deal through the issue of a preferential allotment of shares at ₹1,815.91 apiece, a 14.5 per cent premium to Friday's close. Encora’s current shareholders will receive a 20 per cent stake in the combined firm.
The investors will have the right to appoint two nominee directors to Coforge’s board, along with representation on key board committees. The combined entity is expected to operate at an Ebit (earnings before interest and taxes) margin of 14 per cent, and the acquisition is projected to be earnings-per-share accretive in 2026-27.
Encora, which has strengths across AI-driven engineering supported by cloud and data capabilities, projected to have revenue of $600 million for FY26 and an adjusted Ebitda margin of about 19 per cent.
The transaction is subject to customary closing conditions and regulatory approvals.
“The Encora acquisition is a defining moment for our organisation. It establishes a scaled, AI-led engineering capability moat for the firm, underpinned by capabilities that help create enterprise data cores and cloud foundations purpose-built for AI. The new $2.5 billion firm, with a $2 billion enterprise core of AI-led engineering, data and cloud services, will set the benchmark for making the promise of AI real for enterprises,” said Sudhir Singh, chief executive officer and executive director of Coforge.
Singh added that with the augmented enterprise AI-led engineering core, the company expects growth to accelerate further and move to “an even higher orbit”.
Coforge said the acquisition will create a roughly $2.5 billion technology services company, with AI-led engineering, data and cloud services alone expected to generate $2 billion in revenue in FY27. The company estimates that its AI-led product engineering business could reach $1.25 billion, cloud services about $500 million, and data engineering approximately $250 million. In addition, Coforge’s hi-tech and healthcare verticals are expected to achieve material scale immediately after the acquisition, with each operating at an annualised revenue run rate of $170 million.
Coforge’s FY25 sales were about $1.4 billion.
Pareekh Jain, founder of technology advisory firm EIIR Trend, said the deal was a positive one for Coforge. “Coforge has been on an inorganic expansion path. They have mastered it. The quality of its acquisitions has also been good. This particular transaction will allow it to enter new segments and cross-sell,” he said.
The acquisition will reposition Coforge as a company with scaled nearshore delivery capabilities in Latin America, supported by an engineering and AI talent base of more than 3,100 subject-matter experts serving US clients. It will also significantly expand Coforge’s presence in the western and midwestern US, regions that before the acquisition contributed only 25 per cent of its US revenues. The combined group will have 45 scalable client relationships each generating $10 million in revenue.
Coforge has been on an acquisition drive as it seeks to strengthen its AI capabilities. So far in 2025, the company has acquired three firms. In 2024, it acquired Cigniti as part of its ambition to become a $2 billion company.