New Delhi, Dec 26 (NationPress) Coforge has officially declared its intention to acquire the US-based engineering services company Encora in a substantial all-stock transaction valued at $2.35 billion. This acquisition signifies one of the most significant deals within India's IT services sector.

The transaction will be executed via a share swap, wherein Coforge will issue 93.8 million equity shares at a price of Rs 1,815.91 each.

This non-cash deal is estimated at approximately Rs 17,032 crore. Following the completion of this agreement, Encora's stakeholders will possess around 21.25 percent of the augmented equity capital of Coforge.

In a statement following its board assembly, Coforge indicated that this acquisition will forge a technology services powerhouse with a total revenue target of about $2.5 billion.

The merged entity is set to emphasize AI-driven engineering, cloud, and data services, which are projected to generate nearly $2 billion in revenue by FY27.

Coforge anticipates that AI-driven product engineering could surpass $1.25 billion in revenue, cloud services may contribute around $500 million, and data engineering could yield over $250 million.

The combined operation is expected to achieve an EBIT margin of about 14 percent after the amortization of intangibles, with no expected dilution of earnings.

Founded in Silicon Valley, Encora reported consolidated revenues of $516 million in FY25 and is projected to reach $600 million in FY26, operating with an adjusted EBITDA margin of 19 percent.

The acquisition will be primarily financed through equity amounting to $1.89 billion, while the remaining funds will be sourced via a bridge loan or a qualified institutional placement to settle Encora's current term loan.

Coforge's board has sanctioned raising up to $550 million through a QIP or other authorized pathways, although they noted that a QIP might be unnecessary if alternative funding solutions are secured.

Coforge emphasized that this deal will substantially bolster its operations across crucial verticals. The HiTech and Healthcare sectors are expected to scale up immediately, each achieving a run-rate of around $170 million post-acquisition.

Encora contributes AI-driven healthcare solutions across pharmaceuticals, medtech, and healthtech, along with 11 major clients each generating over $10 million in annual revenue, bringing the total number of large accounts to 45.

This acquisition also broadens Coforge's delivery network, particularly in nearshore regions. Encora adds over 3,100 professionals across Latin America and enhances Coforge's presence in the US West and Midwest, anticipating a 50 percent growth in Coforge's North America business to over $1.4 billion.