Shut down Pegasus? Focus on drones? NSO mulling desperate options, says report

The snooping allegations centred on the Pegasus spyware appear to have pushed its creator, NSO Group, to consider desperate measures.

Bloomberg reported on Tuesday that NSO Group was exploring options such as shutting down the Pegasus unit and even selling the entire company.

Bloomberg reported, “Talks have been held with several investment funds about moves that include a refinancing or outright sale... The company has brought in advisers from Moelis & Co. to assist, and lenders are getting advice from lawyers at Willkie Farr & Gallagher..."

The publication claimed two US funds were prospective owners that were mulling “closing Pegasus” and injecting “about $200 million in fresh capital to turn the know-how behind Pegasus into strictly defensive cyber security services, and perhaps develop the Israeli company’s drone technology...”

NSO Group has faced lawsuits and investigations in multiple countries after several media outlets reported in July that many countries had used Pegasus to hack phones of numerous people including journalists, opposition leaders and activists.

This led to investigations by the Israeli government into NSO Group's activities. The company announced it ended contracts with clients that had abused Pegasus to target civilians.

Bloomberg reported the restrictions by the US had “put added pressure on NSO, which needs to pay back about $450 million in debt, just two years after a management buyout that valued the company at about $1 billion. Moody’s Investors Service said last month there’s an increasing risk the company will violate the terms of its loans.”

The allegations have hit NSO Group’s market value significantly. Bloomberg reported, “A loan with a face value of over $300 million that NSO issued in 2019 was trading in November at an all-time low bid of 70 cents on the dollar. It was quoted Monday at a bid of 50 cents on the dollar, according to people familiar with the prices.”

Shutting down Pegasus would hit NSO Group heavily as the “unit accounts for about half of NSO’s revenue", Bloomberg reported.

Drone ambitions?

Last year, NSO Group displayed a new drone defence system called Eclipse that takes control of intruding drones. NSO Group had claimed more than 10 countries had brought Eclipse to protect sites like energy facilities.

NSO Group claimed Eclipse was different from existing-anti-drone solutions as it sought to take control of intruding drones and land them safely rather than destroying them, which could pose risk of collateral damage.