Coforge, a leading IT company, has recently approved the scheme of amalgamation of Cigniti, a software testing services provider. This merger will take place through a share-swap, with Cigniti shareholders receiving one equity share of Coforge for every five equity shares of Cigniti held. This strategic move is in line with Coforge’s plan to grow through mergers and acquisitions.
The merged entity will create three new verticals in Retail, Technology, and Healthcare, with the Retail vertical expected to generate around $100 million annually. Additionally, the hi-tech and healthcare verticals are projected to reach about $50 million in annual revenue post-merger. Coforge, which currently derives 48% of its revenue from North America, aims to expand its presence in key markets like the West, South-West, and Mid-West regions.
Since the announcement of the Cigniti acquisition, Coforge’s stock has surged by 90%, while Cigniti’s stock has seen a 35% increase. This difference in stock price performance is seen as favorable for Coforge shareholders, as it could result in lower potential dilution. The share-swap ratio is aligned with the current share prices of both companies, with Cigniti trading at a marginal discount of 2%.
In conclusion, the merger between Coforge and Cigniti is expected to bring about significant growth and expansion opportunities for both companies. With a clear strategy to capitalize on new verticals and expand its footprint in the lucrative North American market, Coforge is poised for continued success in the IT industry.
