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Verint in talks to acquire Israeli spyware firm NSO, source confirms

Negotiations valuing the Israeli cyber surveillance firm at around $1 billion first reported on by The Wall Street Journal

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

An Israeli woman uses her iPhone in front of the building housing the Israeli cybersecurity firm NSO Group, on August 28, 2016 in Herzliya, near Tel Aviv. (AFP Photo/Jack Guez)
An Israeli woman uses her iPhone in front of the building housing the Israeli cybersecurity firm NSO Group, on August 28, 2016 in Herzliya, near Tel Aviv. (AFP Photo/Jack Guez)

US software firm Verint Systems is in talks to buy Israeli cyber-surveillance company NSO Group at a value of about $1 billion, a person familiar with the matter confirmed on Monday.

The person confirmed the two parties were in negotiations, after the Wall Street Journal first reported on talks for the deal.

An NSO spokesman in Israel declined to comment. Verint in the US was not immediately available for comment, outside US working hours.

Verint has offered to pay San-Francisco based private equity firm Francisco Partners, the controlling shareholder of NSO, with its stock and assuming debt, as part of the deal, the WSJ said. If the negotiations come to fruition, then Francisco Partners would become the largest shareholder in Verint.

Francisco Partners acquired NSO in 2014 for reportedly some $110 million to 130 million. In July last year, Calcalist reported that 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.

Verint, a New-York based analytics company founded in 2002, sells software and hardware products for security, surveillance and business intelligence. The company trades on the Nasdaq at a market value of $2.8 billion.

Herzliya-based NSO helps governments spy on cellphones. The Israeli company made headlines 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 startup, set up in 2009 by founders Omri Lavie and Shalev Hulio,
alumni of elite IDF intelligence unit 8200, has cyberespionage software capable of completely overtaking devices. Its Pegasus software is able to record conversations and gain access to photos, text messages and websites from a smartphone.

The spyware was also allegedly used by people purported to be Mexican government officials to target Mexican journalists, lawyers and activists, a report by Citizen Lab at the University of Toronto said last year.

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