Cigniti Technologies shares fell 8% to Rs 1,707.15 on the BSE in Monday's intraday trade on profit booking after the company's board authorized the merger with and into Coforge. The stock price of the information technology (IT) enabled services company has fallen 14 percent from its 52-week high of Rs 1,980.75, set on December 17, 2024.
In an exchange filing, Coforge announced that the merger with Cigniti had been approved. Following this, Coforge will absorb Cigniti, and according to the announced swap ratio, Cigniti's stockholders will get one equity share of Coforge for every five shares held in Cigniti.
Coforge's shares are down 1% on the BSE at Rs 9,388.50 in an intraday deal. In comparison, the BSE Sensex was down 0.36 percent at 78,413 at 09:45 AM. Cigniti's stock price has risen 62% in the calendar year 2024, while Coforge's has increased 52%, compared to the benchmark index's approximately 9% rise.
According to ICICI Securities, the swap ratio is broadly consistent with the current market pricing ratio. Cigniti provides assurance and digital engineering services around the world, and the merger will allow the company to expand across diverse industries and regions, with a strong focus on the US market, where both companies have clients on the east and Midwest coasts, respectively.
As per the brokerage business, Coforge will also build three new scaled-up verticals - Retail, Technology, and Healthcare - and will focus on AI opportunities as a whole.
Meanwhile, the merger scheme is subject to statutory and regulatory approvals, including those from the stock exchanges, the Securities and Exchange Board of India (Sebi), the respective companies' shareholders and creditors, and the National Company Law Tribunal's jurisdictional bench.
Cigniti is in the business of providing digital assurance and engineering (software testing) services that aid in the prediction and prevention of unexpected failures by leveraging AI-driven, proprietary Continuous Testing & Test Automation solutions that are platform and tool agnostic, thereby optimizing engagement for customer experience.
Meanwhile, Coforge provides services around the world, both directly and through its network of subsidiaries and abroad locations. The company provides information technology/information technology enabled services across geographies, including the Americas, Europe, Middle East and Africa, India, and Asia Pacific, and it is engaged in the application, development, and maintenance of managed services, cloud computing, and business process outsourcing for organizations in a number of sectors, including financial services, insurance, travel, transportation and logistics, manufacturing and distribution, ap
The merger of Coforge and Cigniti will develop synergistic capabilities between the two companies' operations, resulting in a strategic edge in the worldwide arena of AI-led assurance and digital engineering IT solutions. The merger will be strategically positioned to expand across multiple industries and locations, with a significant focus on the US market, according to the company's justification for the merger.
With previous acquisitions and the amalgamation, the combined business will develop three (three) new scaled-up verticals: retail, technology, and healthcare. The consolidation will also assist Coforge achieve its goal of expanding its presence in the South-West, Mid-West, and Western US markets. The combined organization will be able to meet the substantial potential created by the growth of AI for specialist Assurance Services, according to the company.
The merger will also allow for the lowering of operational expenses through order pooling and increased sales. Furthermore, it will develop a culture of sharing best practices and cross-functional learnings, resulting in increased systemic efficiency.
