Wed. May 18th, 2022

Israel’s NSO Group, which manufactures the cyberweapon Pegasus, is in talks to be sold for roughly $ 300m to a company run by ex-US soldiers, counting on their connections to restore its flagging business, said two people familiar with the talks.

The possible sale to Integrity Partners could present an opportunity for the company, which has been blacklisted by the US Department of Commerce, to burnish its reputation.

According to a person close to NSO, there are other potential suitors, although discussions with Integrity are the furthest along. The US investment firm run by former US army officials plans to move NSO’s domicile to the US, where it would be regulated by American laws, said one person briefed on the matter.

The US agency accused NSO in November of selling its smartphone-hacking product to countries that used it for “transnational repression”. About the same time Apple informed American diplomats in east Africa that Pegasus had recently targeted their smartphones.

Pegasus works by infiltrating a target’s smartphone and mirroring its encrypted contents so that the customer can view them.

The Israeli government licenses the technology to be sold to its allies on the condition that it is only used to defend against terrorism and serious criminal actions.

However, it has regularly been traced to the phones of hundreds of journalists, academics, dissidents and private citizens.

The overture, first reported by Ha’aretz newspaperincludes a provision that would have the retired American soldiers lobby the US government to remove NSO from the US blacklist, cancel all its contracts, and then start fresh with the US government and its four closest allies as sole clients, according to a letter of intent cited by Ha’aretz.

Integrity served as a financial adviser to DHC Acquisitions, a blank-check company that raised $ 300m in March 2021, according to filings at the Securities and Exchange Commission. Three of its four partners hold senior roles at DHC, including chief operating officer Pat Wilkison, who served as a U.S. Army helicopter pilot. Wilkison did not return calls seeking comment.

DHC Acquisitions did not return an email seeking comment. The other partners at Integrity listed experience as combat soldiers who have since worked in finance and technology companies, including Elad Yoran, an adjunct professor at Columbia University.

NSO said: “The company generates great interest with a few US-based funds, and the company is in talks with them.”

NSO has faced mounting legal woes. Apple and Facebook, which owns the WhatsApp messaging service, have sued it in US courts over claims that the company abused their platforms to deliver Pegasus to users’ phones since early 2019.

The US blacklisting has also made it difficult for the company to source key components for its servers, according to company insiders, and two senior leaders have departed in recent months.

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