What just happened? Ownership of Israel's NSO Group could pass to American control, marking a milestone for a company that once symbolized Israel's dominance in commercial surveillance technology. The pending sale highlights how international scrutiny and regulatory pressure have reshaped one of Israel's most controversial tech exports.
Ownership of the Israeli cyber intelligence firm NSO Group, which operates the Pegasus surveillance platform, is set to shift to American control under a pending deal led by US producer and entrepreneur Robert Simonds. Valued in the tens of millions of dollars, the agreement would transfer one of Israel's most controversial technology companies to a US investor group, pending approval from Israeli defense authorities.
Founded in 2010, NSO Group has long faced scrutiny over its Pegasus software, which can remotely access smartphone data without a user's knowledge. Governments have licensed the technology for counterterrorism and law enforcement, but human rights groups and regulators accuse some clients of targeting journalists, activists, and political figures.
The company remains subject to defense export regulations, since Israeli authorities classify the software as a national security cyber tool. Any ownership transfer requires final approval from the Defense Export Control Agency, part of Israel's Ministry of Defense.
Since early 2023, co-founder Omri Lavie has consolidated NSO's ownership under a Luxembourg-based holding company entirely under his control. The consolidation came after lenders moved to recover roughly $500 million in loans initially extended to facilitate a share buyback from Francisco Partners, the US private equity firm that once held majority control of NSO. The lenders' intervention ultimately returned effective ownership to Lavie, who has maintained control ever since.
Simonds, best known as the founder of STX Entertainment – producer of mainstream films featuring actors such as Adam Sandler and Reese Witherspoon – joined NSO's board shortly after Lavie regained control. His initial attempt to acquire the firm in mid-2023 fell through, prompting him to resign from the board that August.
Sources familiar with the negotiations told CTech that the latest agreement revives his offer, this time backed by a group of US investors. The purchase terms remain undisclosed, but the transaction likely will settle or restructure NSO's estimated $500 million debt. Upon closing, Lavie will exit the company entirely, marking the departure of NSO's founding leadership. Co-founder Shalev Hulio stepped down roughly two and a half years ago amid mounting international scrutiny and financial strain.
Industry sources cited in Israeli business media say Lavie's tenure stabilized NSO's balance sheet after years of steep losses caused by the US Commerce Department's 2021 decision to blacklist the company, which sharply curtailed its ability to work with US firms and suppliers. Despite these constraints, the company reportedly returned to near break-even performance and modest profitability under Lavie's control, enhancing its appeal to foreign investors.
The pending acquisition will also undergo regulatory scrutiny in the United States. The Securities and Exchange Commission must approve the transaction, and regulators may face complications due to previous business dealings Simonds had in China.
Simonds received funding from Chinese private equity firm Hony Capital in 2012 when founding STX Entertainment. Hony is an affiliate of Lenovo's parent company, Legend Holdings. Subsequent investment rounds included major backers such as Tencent and Hong Kong's PCCW, followed by a $700 million capital raise in 2019 led by TPG and Hony Capital.