(Reuters) July 28, 2019 — "BlackRock Inc (BLK.N), 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."
Continue reading at Reuters for more details.
UPDATE JULY 30, 2019: The Wall Street Journal piled on with a headline: "Russia-Linked Buyout Firm Violates Deal With U.S. National Security Panel to Sell Stake", starting out with: "Cfius is threatening to fine Pamplona for ‘material breach’ of agreement to sell out of cybersecurity company Cofense."
"A battle is brewing between a U.S. national-security panel and a Russian-oligarch-backed private-equity firm that failed to meet their agreement. "The U.S. government told private-equity firm Pamplona Capital Management last year to sell out of Leesburg, Va., cybersecurity firm Cofense Inc. U.S. officials raised national-security concerns about the level of foreign money behind Pamplona and the nature of Cofense’s business.
"Pamplona committed to finding a buyer to take over its minority investment by July 19, but it failed to do so. Now both the firm and Cofense are in “material breach” of that agreement, according to an email that the Committee on Foreign Investment in the U.S. sent to Pamplona and Cofense last week. The panel, known as Cfius, told Pamplona and Cofense they could face fines each day that they fail to find a buyer for the stake, among other potential penalties, according to the email, which was read to The Wall Street Journal. Continue reading at The Wall Street Journal.
UPDATE JULY 31, 2019: WSJ: "BlackRock, Pamplona Talks Over Cybersecurity Firm Cofense Break Down"
BlackRock Inc. is no longer in talks with Pamplona Capital Management to take over the private-equity firm’s stake in cybersecurity company Cofense Inc. Talks between the two firms faltered in the last 24 hours, said people familiar with the matter. BlackRock is already an existing minority investor in Cofense. The asset manager could change its mind and reengage with Pamplona at any point.
It is the latest twist in a showdown that pits the national-security panel known as the Committee on Foreign Investment in the U.S. against Pamplona, a private-equity firm with links to wealthy Russians. American officials have raised national-security concerns about the level of foreign money behind Pamplona and the nature of Cofense’s business.
Talks between the two firms faltered in the last 24 hours, said people familiar with the matter. BlackRock is already an existing minority investor in Cofense. The asset manager could change its mind and reengage with Pamplona at any point. Full Story at WSJ.
UPDATE AUG 16, 2019: WSK: "BlackRock Offers to Buy Cofense Stake from Russia-Linked Firm, With a Catch"
"The Committee on Foreign Investment in the U.S., known as CFIUS, last year ordered a private-equity firm with ties to wealthy Russians to sell its stake in a U.S. cybersecurity firm called Cofense Inc. American officials had raised national-security concerns about the amount of foreign money invested in the private-equity firm, Pamplona Capital Management, given the nature of Cofense’s business."
"BlackRock Inc.’s private-equity-funds arm has agreed to take over Pamplona’s minority stake in Cofense, said people familiar with the talks. Under the proposal, no money would change hands now, with Pamplona being paid if shares of Cofense are sold down the road, some of the people said. The proposed deal was sent to Cfius for approval Friday, some of the people said." Full story at the WSJ:
UPDATE AUG 22, 2019: BlackRock gets approval to invest in cybersecurity company Cofense
A national security panel that oversees foreign investment in US businesses approved the transfer of a stake in cybersecurity company Cofense from a Russia-linked private equity firm to funds managed by BlackRock.
People familiar with the matter said the Committee on Foreign Investment in the US, known as Cfius, gave its approval to the deal on Monday. Article at Private Equity News
In the investment banking and VC world this is considered as "Cofense selling it’s Pamplona stake to Blackrock PE in a down round."