Coforge's shares are in focus following the announcement of its acquisition of Encora, a Silicon Valley-based AI-native firm, for an enterprise value of $2.35 billion. The deal, revealed after market hours on Friday, December 26, 2025, is a landmark transaction poised to significantly reshape Coforge's position in the global technology services market.
The acquisition of Encora will establish a technology services powerhouse with a combined revenue of approximately $2.5 billion. Coforge expects that AI-led engineering, data, and cloud services will generate approximately $2 billion in revenue by FY27. Specifically, the AI-led product engineering business is projected to exceed $1.25 billion, cloud services are expected to reach around $500 million, and data engineering is projected to reach approximately $250 million.
The transaction is structured as an all-stock deal. Coforge will acquire Encora from its current owners, private equity firms Advent International and Warburg Pincus, along with other minority shareholders. The acquisition will be funded through a preferential allotment of equity shares valued at approximately $1.89 billion. Following the completion of the transaction, Encora's shareholders will hold approximately 20% to 21.25% of Coforge's expanded share capital. Coforge's board has also approved raising up to $150 million, potentially through a Qualified Institutional Placement (QIP), to retire Encora's existing debt and manage other transaction-related expenses.
The acquisition is expected to bolster Coforge's capabilities in AI, cloud, and data services. The company aims to be the leading AI-driven engineering firm in the new era. Encora's expertise in AI-driven engineering services for Fortune 1000 enterprises and digital-native companies will strengthen Coforge's position in the market. The deal will also give Coforge scaled near-shore delivery capability in LATAM, with an AI Talent base of 3100+ SMEs servicing US Clients. It will significantly expand the West and Mid-West US client footprint of Coforge.
Encora's FY26E revenue is projected to be $600 million, with an adjusted EBITDA margin of approximately 19%. The combined business is expected to operate at a 14% EBIT margin, and the acquisition is projected to be EPS accretive in FY27.
This acquisition marks the largest takeover by an Indian IT company in the engineering research and development (ER&D) segment. It is the fourth-largest ER&D deal globally and the second-largest acquisition ever by an Indian IT services firm.
The transaction is subject to customary closing conditions and regulatory approvals.
