Deemed As 'Valueless' Ernst & Young Valued Israeli Spyware Firm At $2.3B: FT

  • Ernst & Young Global Limited valued the troubled Israeli spyware company NSO Group at $2.3 billion just months before it came at the risk of defaulting on its debt.
  • According to the documents seen by Financial Times, the EY valuation is more than twice the valuation two years ago made by a Luxembourg-based firm. 
  • The estimate of NSO's enterprise value was made without visiting the company or verifying the information its analysts had provided.
  • Berkeley Research Group, a consultancy representing NSO's private equity owners, said earlier this year that the company's equity was "valueless."
  • The EY valuation also exceeds the buyout offer proposing to buy a minority stake in a deal valuing NSO at $1.6 billion, including $500mn in debt. 
  • That figure was presented to NSO's investors at a July 2021 meeting, according to a separate document seen by the FT, though the deal did not go through.
  • Last year, the U.S blocked the company for activities contrary to the country's national security or foreign policy interests.
  • According to the Politico report, NSO Group admitted that at least five EU countries used its software. The firm has terminated at least one contract with an EU member country following the abuse of its Pegasus surveillance software.
  • Pegasus software can track a user's mobile phone, and its misuse has landed NSO at the center of high-profile privacy and human rights abuse cases.
  • Speaking to the European Parliament's committee, NSO Group's General Counsel Chaim Gelfand said the company had "made mistakes" but had also passed up a huge amount of revenue, canceling contracts since misuse had come to light.
  • Image by S. Hermann & F. Richter from Pixabay

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