American private equity firm AE Industrial Partners has purchased Israeli spyware company Paragon in a deal worth up to $900 million, according to recent reports from Israeli media.
The acquisition includes an upfront payment of $450 million, with 20% allocated to Paragon's 400 employees and 30% to its five co-founders. The remaining 50% will be distributed between U.S. venture capital fund Battery Ventures and Israeli venture capital fund Red Dot.
Paragon, which operates without a public website, was founded by former Israeli intelligence officers including Ehud Schneorson, who previously commanded Unit 8200, Israel's elite intelligence agency. The company's leadership includes CEO Idan Nurick, CTO Igor Bogudlov, and VP of Research Liad Avraham.
The company's main product, Graphite, competes with NSO Group's Pegasus spyware and enables access to popular messaging and email applications on target devices, including WhatsApp, Signal, Facebook Messenger, and Gmail.
Recently, Paragon secured a $2 million contract with U.S. Immigration and Customs Enforcement (ICE) for a proprietary solution including licenses, hardware, and training. Sources indicate that Paragon implemented controls to prevent non-U.S. customers from targeting American residents during the vetting process.
This acquisition follows a pattern of Western investment in Israeli surveillance technology. Previously, U.S. private equity firm Francisco Partners acquired a majority stake in NSO Group in 2014, though the founders later bought back control in 2019.
The deal emerges against a backdrop of increased scrutiny of spyware companies. The U.S. government has taken action against several firms, including placing NSO Group on an economic blocklist in 2021 after allegations of targeting U.S. citizens and embassy employees.