NEW YORK: BlackRock Inc, an investor in Cofense Inc, is in advanced talks to take over the US cyber security firm, after a US national security panel asked buyout firm Pamplona Capital Management LLP to sell its stake, people familiar with the matter said on Sunday.
The Committee on Foreign Investment in the United States (CFIUS), which scrutinizes deals by foreign acquirers for potential national security concerns, has not disclosed why it asked Pamplona to sell its 47 per cent stake in Leesburg, Virginia-based Cofense, which helps protect email users from phishing attacks.
The development represents one of the rare, high-profile examples of CFIUS undoing a deal that had already been completed.
A major investor in Pamplona’s private equity funds is Russian billionaire Mikhail Fridman, who was included in an “oligarchs’ watchlist” by the US Treasury Department that could have resulted in sanctions against him because of his potential ties to the Kremlin.
However, unlike other Russian oligarchs such as Oleg Deripaska and Viktor Vekselberg, Fridman has not been hit by US sanctions.
“The process remains ongoing and we are working diligently towards a solution,” Pamplona said in a statement, declining to comment further. Representatives for BlackRock, Cofense, Fridman and the US Treasury, which chairs CFIUS, did not immediately respond to requests for comment.
Pamplona decided last October to launch an auction process to sell its stake after CFIUS approached it. Pamplona took the decision 10 months after acquiring Cofense with BlackRock, and other investors, including Adam Street Partners and Telstra Ventures, in a $400 million deal.
BlackRock, which owns a 30 per cent stake in Cofense, is the front-runner to buy Pamplona’s stake in a deal that could be reached as early as this week, the sources said. However, it is still possible that another bidder prevails or that negotiations will fall through, the sources added, asking not to be identified because the negotiations are confidential.
A July 19 deadline agreed with CFIUS to reach a deal for Cofense has already lapsed. Complicating negotiations is the involvement of the US government, which has formed a trustee with the company to oversee the sale, the sources said.
The protracted process is also weighing on price negotiations. Pamplona is negotiating with BlackRock a mechanism of deferred payments that will be based on the future financial performance of Cofense, which it hopes will eventually lead to a deal value higher than last year’s investment, the sources said.
— Reuters
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