Coforge to Acquire Encora for EPS Accretive Transaction
Coforge Limited is acquiring Encora in an EPS-accretive transaction expected to close around Q1FY27. The deal values Encora at US$2.35 billion. The combined entity will have approximately US$2.5 billion in revenue, with over US$2 billion from AI-led services. Coforge may raise US$550 million via QIP.
The acquisition is a significant strategic move that will substantially increase Coforge's scale, market presence, and capabilities in key growth areas like AI, leading to a material impact on its business and financial performance.
The acquisition of Encora is expected to be EPS accretive, enhance EBITDA margins through synergies, and create a larger, more capable entity in AI-led services, which are positive developments for the company.
Coforge Limited has announced its intention to acquire Encora, a move expected to be EPS (Earnings Per Share) accretive. The transaction is projected to close around Q1FY27, with the presented financials being pro forma in nature. The company assumes cost synergies of US$20 million and an Enterprise Value (EV) for Encora of US$2.35 billion.
The acquisition is expected to result in approximately a 90 basis points increase in the combined EBITDA margin due to cost synergies. The amortization assumption is based on Encora's EV of US$2.35 billion, with about 20% allocated to customer relationships having an estimated useful life of 12 years, subject to final evaluation by a Big 4 accounting firm. No interest expense has been assumed for retiring Encora's term loan, and a Qualified Institutional Placement (QIP) is modeled at INR 1815.91 per share.
Pro forma financials for FY27E indicate a combined revenue of US$2,826 million, EBITDA of US$533 million (18.9% margin), and PAT of US$283 million, resulting in an EPS of US$53.7. The combined entity is expected to have approximately 44,000 employees and revenues of around US$2.5 billion, with over US$2 billion from AI-led Engineering, Data, and Cloud services. Coforge plans to issue approximately 93.8 million shares to Encora sellers and potentially raise US$550 million via QIP, with the QIP pricing assumed at INR 1815.91 per share, a premium of 8.5% to the signing date closing price. The closing of the transaction is anticipated around Q1FY27, with the QIP, if undertaken, occurring around the closing period.
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Coforge Limited filed this with the NSE as a statutory disclosure, categorised under acquisition. It is a primary document, not a recommendation, and the desk marks it high impact, which is the band that most often changes something.
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See the model portfoliosA plain-language summary of a public exchange filing by Coforge Limited. Read the original for the full detail.