Paragon, an Israeli spyware maker that has kept a low profile in recent years, was acquired by American private equity giant AE Industrial Partners last week, according to Israeli news reports.
Tech news website Calcalist reported that the investment firm is acquiring Paragon for $500 million, and that the deal could reach $900 million depending on the company's growth. The Globes reported that the upfront payment was $450 million, with 20% going to Paragon's 400 employees, 30% going to its five co-founders, and the remaining 50% going to US venture capital fund Battery Ventures. and will be donated to Israeli venture capital fund Red. dot.
In 2021, Forbes first revealed Paragon's existence, but Paragon didn't have a website and still doesn't have one. The magazine reported that the company was founded by a group of former Israeli intelligence officers. Ehud Shneerson is a former commander of Unit 8200, Israel's famous spy agency, whose graduates often work in the private sector in cybersecurity. So are CEO Idan Nurick, CTO Igor Bogudlov and VP of Research Liad Avraham.
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AE Industrial did not respond to TechCrunch's request for comment on the reported transaction.
Mr. Newrick and Mr. Abraham did not respond to requests for comment sent via LinkedIn. Bogdorov and Schneerson could not be reached for comment.
Battery Ventures spokeswoman Rebecca Bachmann declined to comment. Red Dot did not respond to messages seeking comment.
Forbes reported in 2021 that Paragon offered a service to hack phones that allowed access to apps on a target's phone, including WhatsApp, Signal, Facebook Messenger, and Gmail. Paragon's spyware product “Graphite'' is considered a competitor to Pegasus and other similar spyware products from NSO Group.
In October, Wired reported that U.S. Immigration and Customs Enforcement signed a one-year contract worth $2 million with Paragon to acquire a “fully configured, unique solution” that includes licensing, hardware and warranty, maintenance and training. It was reported that they had tied the knot. Last month, The New Yorker reported, citing Paragon officials, that the contract with ICE was concluded after a vetting process that demonstrated Paragon had controls in place to prevent customers in other countries from hacking U.S. residents. It was reported that he said.
This has been an ongoing issue with NSO Group, which has been accused of providing tools to countries and then targeting US citizens, including US embassy staff. These hacking allegations are also why the U.S. Department of Commerce placed NSO Group on its economic blockade list in 2021, effectively banning U.S. companies from doing business with the company. The US government has taken similar measures, including sanctions, against spyware maker Intellexa.
By acquiring Paragon, AE Industrial followed the example of other Western investment firms investing in Israeli spyware makers. In 2014, US private equity firm Francisco Partners paid $130 million to acquire a 70% stake in NSO Group, Calcalist reported at the time. That same year, Francisco Partners was in contact with the now-defunct Italian spyware company Hacking Team, whose leaked emails were reportedly stolen and published online by notorious hacktivist Phineas Fisher. .
In 2019, two of NSO's founders, Shareef Furio and Omri Ravi, bought the company back from Francisco Partners and regained control.