February 14, 2019 / 1:13 PM / 4 months ago

UPDATE 1-NSO Group's management buys firm from Francisco Partners

(Adds details, quote, background)

TEL AVIV, Feb 14 (Reuters) - Israeli cyber surveillance firm NSO Group said on Thursday its founders and management had acquired the company from U.S. private equity firm Francisco Partners with the support of European private equity firm Novalpina Capital.

NSO did not provide financial details. An industry source told Reuters the deal for Francisco Partners’ stake of more than 65 percent was based on a company valuation of about $1 billion. Management and employees already own the rest of NSO.

NSO is best known as a supplier of mobile surveillance tools to governments and law enforcement agencies. It had revenue of $250 million and dozens of licensed customers in 2018.

The Luxembourg-headquartered company was founded in 2009 by Shalev Hulio and Omri Lavie, who led the acquisition. It was in the spotlight in 2017 amid allegations that the Mexican government used the company’s Pegasus mobile spyware to target private citizens.

Hulio, who is CEO of NSO, said Novalpina was joining as an equity partner.

“Together we can take NSO Group to the next level, launching new cutting-edge products that help our customers reduce the threats from terrorism and crime,” he said.

In July talks with U.S. software company Verint Systems to merge its security division with NSO for about $1 billion ended without a deal being reached.

Israeli media reported in 2017 that Blackstone Group was in talks to buy part of NSO, but sources told Reuters that the U.S. private equity firm pulled out of those discussions a month later.

A Saudi dissident close to murdered journalist Jamal Khashoggi filed a lawsuit in December charging that NSO helped the royal court take over his smartphone and spy on his communications with Khashoggi. NSO has denied this. (Reporting by Tova Cohen Editing by Steven Scheer; Editing by Kirsten Donovan)

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