Israeli surveillance specialist NSO Group is reportedly exploring its options that include shutting its controversial Pegasus unit or selling the entire company.

This is according to a Bloomberg report, which cited people familiar with the matter. It also reported that the spyware company is allegedly in danger of defaulting on its debts.

The firm has allegedly been edged closed to a default on $500m in loans, after it was blacklisted by the United States in early November.

Sale or closure

Being placed on the US Entity List, meant that exports to NSO from US companies are now restricted.

The US Commerce Department said at the time that it had opted for the blacklisting of NSO and another firm (Candiru – another Israeli surveillance specialist), “based on evidence that these entities developed and supplied spyware to foreign governments that used these tools to maliciously target government officials, journalists, businesspeople, activists, academics, and embassy workers.”

According to the Bloomberg report, NSO, which had been valued at $1 billion in private equity deal in 2019, is now mulling whether to sell the entire company, or close down its Pegasus division and instead focus on its drone defence business.

It is reported that talks have been held with several investment funds about moves that include a refinancing or outright sale, and the firm has brought in advisers from Moelis & Co. to assist in the matter.

According to the Bloomberg report, potential buyers include American private equity funds that have discussed taking control and closing Pegasus.

The thinking is that $200 million of fresh capital would be injected into the firm, which would then be used to transision the know-how behind Pegasus into strictly defensive cyber security services.

A spokeswoman for NSO reportedly declined to comment.

Spyware scandal

NSO Group of course has been at the centre of the furore surrounding its Pegasus spyware for much of the past year.

The Pegasus software can essentially track a user’s smartphone, and is used by governments and law enforcement officials.

However there are allegations that Pegasus has been used to spy on political dissidents, journalists, human right activists, and even heads of state.

Pegasus was also reported to have been used in recent months to hack the mobile phones of at least nine US State Department employees. The phones of French cabinet ministers were also allegedly compromised.

NSO for its part has always said it only sells the technology to law enforcement and government agencies to prevent crime and terrorism, and that it has ended contracts with clients that abused it.

Legal troubles

Last month Apple launched a lawsuit against NSO Group and its parent company OSY Technologies for alleged surveillance and targeting of iPhone users in the US.

NSO is also currently engaged in a legal battle with Meta and WhatsApp, after Facebook sued NSO in October 2019.

WhatsApp alleged NSO was behind the cyberattack in May 2019 that infected devices with ‘advanced surveillance hacks.’

Tom Jowitt

Tom Jowitt is a leading British tech freelancer and long standing contributor to Silicon UK. He is also a bit of a Lord of the Rings nut...

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