TEL AVIV: Spyware firm NSO mulls shutdown of its Pegasus unit, sale of company: Report

TEL AVIV: NSO Group, the scandal-plagued spyware company that’s in danger of defaulting on its debts, is exploring options that include shutting its controversial Pegasus unit and selling the entire company, according to people familiar with the matter.

Talks have been held with several investment funds about moves that include a refinancing or outright sale, said the people, who asked not to be identified as the discussions are private. The prospective new owners include two American funds that have discussed taking control and closing Pegasus, one of the people said.

Under that scenario, the funds would then inject about $200 million in fresh capital to turn the know-how behind Pegasus into strictly defensive cyber security services, and perhaps develop the Israeli firm’s drone technology, one of the people said. A spokeswoman for Herzliya-based NSO declined to comment.

Pegasus software can track a user’s mobile phone, and its misuse has landed NSO at the centre of high-profile privacy abuse cases. The product allegedly was supplied to governments that used it to spy on political dissidents, journalists and actvists.

The firm has said it sells the technology to law enforcement and government agencies to prevent crime and terrorism. The US commerce department nevertheless blacklisted NSO. Apple too has sued NSO, seeking to bar it from using its products and services.

The US curbs put added pressure on NSO, which needs to pay back about $450 million in debt, just two years after a management buyout that valued it at about $1 billion.

 A shutdown of Pegasus could leave NSO as a much smaller and potentially less valuable company, because the unit accounts for about half of NSO’s revenue. It expects to record about $230 million in sales this year, one of the people said, 8% less than in 2018.