US private equity investment fund Blackstone Group has halted talks to buy a stake in Israeli smartphone surveillance company NSO Group, "Reuters" reports.
Blackstone, which is traded on the NYSE with a market cap of $38.6 billion, was reportedly negotiating for a 40% stake in NSO for $400 million. NSO told "Reuters" that it was not in any discussions with potential investors.
NSO recently received adverse publicity when the "New York Times" reported that NSO had developed surveillance software that had been used in Mexico against opponents of the regime. The report raised a storm of protest from human rights groups.
The software called Pegasus can breach smartphones, listen to conversations, and monitor text messages and emails etc. The software can be operated remotely using microphones and cameras in the device without the user being aware.
The "New York Times" reported that Pegasus had been acquired for $80 million by three Mexican government agencies in 2011 and had been used to eavesdrop on the government political opponents including journalists, social activists, and lawyers seeking to combat corruption.
Based in Herzliya, NSO was founded in 2011 by IDF 8200 Intelligence Unit veterans Niv Carmi, Shalev Hulio and Omri Lavie.
Published by Globes [online], Israel business news - www.globes-online.com - on August 16, 2017
© Copyright of Globes Publisher Itonut (1983) Ltd. 2017 News of those talks prompted complaints from Citizen Lab at the University of Toronto's Munk School of Global Affairs and digital-rights group Access Now, which allege that the Mexican government has used NSO's Pegasus mobile spyware to illegally target private citizens. Mexico's government is investigating the claims, though Mexican President Enrique Pena Nieto has said the accusations are false. The people, who were not authorized to publicly discuss the talks, declined to say when the discussions ended or if the protests had caused the deal to unravel. NSO spokesperson Zamir Dahbash said the company was not currently in talks with any potential investors. Dahbash declined to discuss the talks with Blackstone or say why they had failed. Access Now last month launched a petition that urged Blackstone to drop plans to invest in NSO and its surveillance technology. Citizen Lab, which has released multiple reports on surveillance campaigns it says were conducted with NSO's surveillance software, last month separately asked Blackstone's board of directors to consider the human rights and ethical implications of investing in NSO. Citizen Lab researcher John Scott-Railton said he was pleased that the talks failed to result in a deal. "NSO's spyware has a documented abuse potential, and the list of cases continues to grow," Scott-Railton said. "Serious investors who have done their due diligence may be thinking twice about just how problematic this category of investments could be to their image and their bottom line."