Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Exclusive: BlackRock in talks to take over Cofense after U.S. security concerns - sources

Stock MarketsJul 28, 2019 04:39PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A sign for BlackRock Inc hangs above their building in New York

By Greg Roumeliotis

(Reuters) - BlackRock Inc (N:BLK), an investor in Cofense Inc, is in advanced talks to take over the U.S. cyber security firm, after a U.S. 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% 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 U.S. 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 U.S. 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 U.S. 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% 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 U.S. 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.

It is also possible, however, that the deal ends up valuing Cofense, which was previously known as Phishme, lower than last year's $400 million valuation, the sources added.

Pamplona and BlackRock did not seek CFIUS approval when they completed their deal for Cofense last year, because the review system is voluntary and the firms thought there would be no national security concerns raised, according to the sources.

The firms relied on Cofense's management team, which also has an equity stake in the company, to run the business, the sources added.

CFIUS has made cyber security and the protection of personal data its top priority in recent months. The U.S. intelligence community's 2019 Worldwide Threat Assessment report cited Russia's efforts to interfere in the U.S. political system.

In another example this year of CFIUS seeking to untangle an acquisition, it asked Chinese gaming company Beijing Kunlun Tech Co Ltd earlier to sell Grindr LLC, the popular gay dating app it has owned since 2016. Grindr collects personal information submitted by its users, including a person's location, messages, and in some cases even someone’s HIV status.

Last year, CFIUS launched a pilot program under which filings for review for certain types of investments in some U.S. technology companies it deems to be of critical importance are no longer optional.

ALFA GROUP TIES

Fridman and his partners control Alfa Group, which includes top Russian private bank Alfa Bank, its biggest food retailer X5 Retail Group and other assets.

Fridman, whose net worth is pegged by Forbes at $15.9 billion, is also a principal shareholder in LetterOne, which invests in energy, telecoms, technology and other areas.

Pamplona was founded in 2005 in London by Moscow-born British dealmaker Alexander Knaster, who had previously served as CEO of Alfa Bank from 1998 until 2004. Last year, Knaster passed on day-to-day management of Pamplona to co-managing partners Martin Schwab and William Pruellage.

Knaster remains chairman of Pamplona, which manages over $12 billion in assets across a number of funds.

BlackRock, the world's largest asset manager, is best known as a provider of mutual funds, but has also invested in private equity since 1999. This year it has raised $2.75 billion for a long-term private capital fund that has a provisional fundraising target of $10 billion.

(The story corrects spelling of Fridman in paragraph seven)

Exclusive: BlackRock in talks to take over Cofense after U.S. security concerns - sources
 

Related Articles

AstraZeneca China summoned over suspected fraud
AstraZeneca China summoned over suspected fraud By Reuters - Jan 29, 2022

BEIJING (Reuters) -Chinese authorities summoned officials of AstraZeneca (NASDAQ:AZN) China regarding an investigation of suspected medical insurance fraud by the company's...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email