Coforge will absorb the smaller Cigniti Technologies subject to approvals from national company law tribunal.
As per the share swap ratio announced, Cigniti’s shareholders will be issued one equity share of Coforge for every five shares held by them in Cigniti.
“Board of Directors of Coforge Limited, based on the recommendation of the Audit Committee and the Independent Directors… has inter alia considered and approved the Scheme of Amalgamation of Cigniti Technologies Limited with and into the Company and their respective shareholders and creditors under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013”, the company said.
Coforge’s market capitalization has doubled to over Rs. 62,000 crore in the past seven months. Cigniti has a market capitalization of Rs. 5000 crore.
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The two companies have appointed EY and Axis Capital to prepare merger terms which they intend to propose to their respective shareholders within a fortnight, ET had reported on Tuesday.Coforge, formerly known as NIIT Technologies, own a 54% stake in Cigniti Technologies.
On May 2, Coforge announced the acquisition of a majority stake in Cigniti Technologies. It subsequently launched an offer of its own shares later that month through the qualified institutional placement (QIP) route to raise Rs. 2240 crore to finance the acquisition of Cigniti’s shares.
The merger offers synergies the two companies believe as Coforge’s clients in north America are largely located on the east coast whereas Cigniti has clients in the west and mid-west, as per details in the QIP documents seen by ET.
“The above swap ratio has been decided as per the joint share exchange ratio report issued by PwC Business Consulting Services LLP and KPMG Valuation Services LLP, registered valuers appointed by the Transferee Company and the Transferor Company respectively, and fairness opinion issued by JM Financial Limited and Axis Capital Limited, SEBI registered merchant bankers appointed by the Transferee Company and the Transferor Company respectively”, said Coforge’s disclosure to stock exchanges.
Cigniti Technologies recently informed stock exchanges that it is moving its registered office to the national capital region where Coforge also has its registered office. Cigniti was earlier registered out of Hyderabad.
Coforge is among the few sizeable listed IT companies without an identifiable promoter which is entirely owned by public investors.
It was earlier majority-owned by Baring Private Equity which had acquired a sizeable stake of nearly 70% in the company over a period of time beginning in 2019. It sold its entire stake last year making significant gains. When it acquired the stake the company’s shares were trading at Rs. 1394 apiece. It exited at Rs. 4700 per share when it sold its remaining 26% stake in August last year. It had also sold partial stakes in 2020, 2021 and 2022.
NIIT was renamed Coforge after the acquisition by Baring Private equity. NIIT’s original promoters were Rajendra Pawar and Vijay Thadani.
Under the leadership of its CEO Sudhir Singh, a former top hand at Infosys, the company hit the $1-billion revenue milestone in April in 2023. It is now looking at AI to sprint to the next milestone of $2 billion and, eventually, $5 billion, Singh told ET recently.
“We think AI represents a massive opportunity for us,” Singh who is also executive director told ET. “We need to transform into being an actual AI-first organisation, because the journey from two to five (billion) or two to ten (billion) becomes that much faster then.” Despite the $250 billion IT industry seeing one of the its worst growth periods in the last two years due to geo-political strife and macro-economic concerns, a select few firms such as Coforge have managed to report strong growth and profitability and have outgrown even some of their larger peers.
