American private equity firm buys Israeli spyware company Paragon
An American private equity firm has closed a deal to acquire the Israeli spyware company Paragon, according to Israeli news outlets.
There are conflicting reports on what AE Industrial Partners, a private equity behemoth, paid for Paragon.
Calcalist, an Israeli business newspaper, reported that AE Industrial spent $500 million with a potential for the deal to grow to $900 million depending on how much the company grows. The Israeli financial outlet Globes reported a $450 million initial payment, also with the potential to rise to $900 million.
A spokesperson for AE Industrial Partners declined to comment.
Globes said the $450 million will be split, with 20% going to Paragon’s 400 employees, 30% to five co-founders and 50% to two venture capital funds, including the U.S.-based Battery Ventures.
The latter is considered one of the world’s top venture capital funds and is based in Boston. It is a major investor in Paragon Solutions, Paragon’s U.S. subsidiary.
Paragon keeps a low-profile and has no website. Its founders are former Israeli intelligence officers, as is true of Pegasus spyware manufacturer the NSO Group.
Its key spyware product, Graphite, reportedly pulls data from cloud backups and can penetrate even encrypted platforms like Signal and WhatsApp.
A direct competitor of the better known NSO Group, Paragon has had more success in the U.S. market.
In October, Wired reported that U.S. Immigration and Customs Enforcement (ICE) had agreed to a $2 million contract with Paragon.
The one-year contract between Virginia-based Paragon Solutions and ICE’s Homeland Security Investigations Division 3 covered a “fully configured proprietary solution including license, hardware, warranty, maintenance and training,” federal spending documents posted online show.
In December 2022, the New York Times reported that Graphite had been used by the Drug Enforcement Administration.
The CEO of Paragon, Idan Nurick, did not respond to a message seeking comment, nor did a spokesperson for Battery Ventures
Suzanne Smalley
is a reporter covering privacy, disinformation and cybersecurity policy for The Record. She was previously a cybersecurity reporter at CyberScoop and Reuters. Earlier in her career Suzanne covered the Boston Police Department for the Boston Globe and two presidential campaign cycles for Newsweek. She lives in Washington with her husband and three children.