Coforge Makes Strategic Move With Acquisition of 54% Stake in Cigniti

Coforge Limited, a leading IT services provider known for its end-to-end software solutions, announced a strategic acquisition on May 2nd, 2024. Coforge entered into a share purchase agreement with promoters and select public shareholders of Cigniti Technologies Limited, aiming to acquire a significant stake in the company.

Acquisition Scope

• Target Stake: Coforge seeks to acquire up to 54% of the total share capital of Cigniti Technologies Limited.
• Completion Conditions: The successful acquisition hinges on finalising definitive agreements and fulfilling specific pre-conditions outlined in the agreement.

Strategic Rationale

• Complementary Strengths: While both companies operate within the IT sector, Coforge and Cigniti possess distinct strengths. Coforge boasts a robust presence across various industry verticals and geographical regions, while Cigniti specialises in quality engineering services.
• Enhanced Industry Coverage: Coforge is expected to benefit from Cigniti’s expertise, leading to a more well-rounded portfolio catering to a broader range of industry verticals.
• Global Expansion: The combined entity will gain a wider geographical footprint, leveraging Cigniti’s established presence in key markets like the US, UK, and Australia.

Regulatory Approvals

The proposed acquisition requires approval from relevant authorities, including:

• The Competition Commission of India (CCI)
• The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act)
• Any other regulatory bodies deemed necessary by Coforge.

Timeline and Considerations

• Timeline: The transaction is anticipated to be finalised by Q2 FY2025, subject to meeting all conditions precedent, obtaining regulatory approvals, and completing closing procedures outlined in the share purchase agreement.
• Financial Terms: Coforge plans to utilise cash for the acquisition, with a per-share purchase price of ₹1,415.

Overview of Cigniti Technologies Limited

Founded in 1998 and headquartered in Telangana, India, Cigniti Technologies Limited is a publicly traded company listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange of India (NSE). Cigniti is a prominent provider of quality and digital engineering services, with a global presence across the US, UK, Australia, Canada, Czech Republic, South Africa, and Singapore.

Looking Ahead

Coforge’s proposed acquisition of Cigniti represents a strategic move to bolster its quality engineering capabilities and expand its global footprint. By merging strengths and expertise, the combined entity holds the potential to become a prominent force within the IT services industry.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.