Blackstone reportedly in talks to buy secretive Israeli spyware firm

US firm looking to purchase 40% stake in Herzliya-based NSO Group at valuation of $1 billion, Calcalist says

Shoshanna Solomon is The Times of Israel's Startups and Business reporter

Apple iPhone5 showing its screen with numpad for entering the passcode. (Watschiwit/iStock)
Apple iPhone5 showing its screen with numpad for entering the passcode. (Watschiwit/iStock)

American multinational private equity firm the Blackstone Group is in advanced talks to buy 40 percent of Israeli cyber firm NSO Group at a valuation of $1 billion, financial news website Calcalist reported Sunday, without saying how it received the information.

Blackstone is in talks to buy a stake in the Israeli company from US private equity firm Francisco Partners, who bought control of the company three years ago for $130 million and at a valuation of $170 million, Calcalist said.

Herzliya based NSO helps governments spy on mobile phones. The Israeli company made headlines last year after the highly sophisticated Pegasus spyware it developed reportedly took advantage of previously undisclosed weaknesses in Apple’s mobile operating system. The system was used in a botched attempt to break into the iPhone of an Arab activist in the United Arab Emirates.

The disclosure of the security breach prompted the US tech giant to boost security for its mobile operating system. In February this year the firm’s spyware was reportedly also used to track Mexican activists investigating government corruption.

The firm, which develops mobile device surveillance software, was set up in 2009 by founders Omri Lavie and Shalev Hulio, alumni of the elite IDF intelligence unit 8200. A message sent to Lavie seeking comment was not immediately answered.

Once the sale is completed Francisco Partners will hold a 40% stake in the firm, while Blackstone and a third investor, Clear Sky, will hold the other 40%, with Clear Sky holding 10 percent. The company founders and the workers will hold the remaining stake, Calcalist said.

Reuters reported in 2015 that the Israeli company is exploring a sale at a value of close to $1 billion.

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