In a landmark cross-border transaction, Indian IT services company Coforge Ltd. has agreed to acquire U.S.-based artificial intelligence (AI) and engineering services provider Encora in a deal valued at $2.35 billion — one of the largest-ever acquisitions by an Indian IT firm in the engineering research and development (ER&D) space.
The acquisition, announced on December 26, 2025, marks a strategic step for Coforge as it seeks to significantly enhance its AI, cloud and data engineering capabilities while expanding its footprint in the United States and Latin America.
Deal Structure and Financing
Under the terms of the agreement:
- Coforge will acquire Encora from private equity backers including Advent International and Warburg Pincus at an enterprise value of $2.35 billion.
- The deal is being structured as an all-stock transaction, where Encora shareholders will receive a roughly 20% stake in the combined company upon completion.
- To fund the acquisition’s equity component — approximately $1.89 billion — Coforge is issuing preference shares at a 14.5% premium to its market price.
- Coforge also plans to raise up to $550 million through a bridge loan or institutional placement to address Encora’s outstanding debt.
- The transaction is expected to close within four to six months, subject to regulatory approvals and customary closing conditions.
Strategic Rationale
Encora, headquartered in Silicon Valley, specializes in AI-driven product engineering, cloud and data services, operating at the intersection of artificial intelligence, cloud computing and data engineering. Its existing partnerships with major technology platforms and its composable AI platform have been key assets in drawing Coforge’s interest.
For Coforge, the acquisition represents:
- A leap forward in AI-led engineering capabilities, enabling the company to support enterprise clients in building data cores, cloud foundations and next-generation AI products.
- A significant geographic expansion in core markets, particularly in the Western and Midwestern United States, where Encora has deep client relationships.
- A strengthened near-shore delivery model in Latin America, with Encora’s workforce of more than 3,100 engineering and AI specialists enhancing Coforge’s talent pool.
Encora’s projected revenue for the fiscal year 2026 is approximately $600 million, with robust profitability — a factor that underpins the combined entity’s expected financial performance.
Financial and Market Impact
Coforge estimates that the combined company will generate around $2 billion in annual revenues by March 2027 and achieve an earnings-before-interest-and-taxes (EBIT) margin of roughly 14%. The deal is also expected to be earnings-per-share accretive by fiscal 2027.
Industry analysts note that this acquisition could help Coforge overtake several Indian IT peers, potentially positioning it among the top seven IT services firms in India, surpassing companies such as Persistent Systems, Mphasis and Hexaware in revenue scale.
Broader Industry Context
The deal underscores the intensifying global consolidation in technology services, particularly in areas driven by artificial intelligence and digital transformation. Indian IT firms — traditionally known for outsourcing and systems integration — are increasingly making strategic buys to build in-house capabilities in high-growth segments such as AI, cloud engineering, data analytics, and product development.
For Coforge, which has steadily expanded its offerings through prior acquisitions, the Encora deal represents a watershed moment in its evolution from a traditional IT services outfit to a next-generation AI and engineering services powerhouse.
