Verint merger talks with Israel's NSO Group terminated: source

TEL AVIV (Reuters) - Talks for U.S. software company Verint Systems to merge its security division with Israeli cyber surveillance firm NSO Group for about $1 billion have ended without a deal being reached, a source close to the negotiations said on Monday.

The source, who spoke on condition of anonymity, did not disclose why the talks fell apart.

NSO declined to comment and Reuters was unable to contact Verint outside U.S. business hours. The talks were first reported in May.

NSO is best known as a supplier of mobile surveillance tools to governments and law enforcement agencies. The company, founded in 2009 by Shalev Hulio and Omri Lavie, was in the spotlight last year amid allegations that the Mexican government used the company’s Pegasus mobile spyware to target private citizens.

Hulio and Lavie opposed the proposed Verint deal, while Francisco Partners, which owns 60 percent of NSO, was in favor, Israeli financial news website Calcalist said.

The website reported that the founders were interested in NSO remaining an independent subsidiary, which Verint opposed.

Hulio and Lavie also argued that thusde deal, which included a $600 million payment in Verint shares that could not be sold during the first year, was not worthwhile because it depended on the future success of the merged company, Calcalist said.

Israeli media reported last year 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.

Israel’s Justice Ministry this month said that a former NSO employee was charged with stealing intellectual property and trying to sell it for $50 million over the Darknet in a manner that could harm national security.

Reporting by Tova Cohen; Editing by Steven Scheer and David Goodman