Complicating the negotiations is the fact that a July 19 deadline that was set by CFIUS has lapsed. Further, the U.S. government has also joined in as a trustee to oversee the sale.
In a significant development, according to sources familiar with the matter at hand, following a U.S. national security panel asking Pamplona Capital Management LLP to sell its stake in Cofense Inc, BlackRock Inc, an existing investor, is in advanced talks to take over the U.S. cyber security firm.
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 Cofense Inc, which helps protect email users from phishing attacks.
The development is a rare high-profile example of CFIUS undoing a deal that had already been completed.
Incidentally, Russian billionaire Mikhail Fridman is a major investor in Pamplona’s private equity funds. He is in the U.S. Treasury Department’s “oligarchs’ watchlist”. Unlike other Russian oligarchs, including Oleg Deripaska and Viktor Vekselberg, Fridman has not been hit by U.S. sanctions.
“The process remains ongoing and we are working diligently towards a solution,” said Pamplona in a statement while declining to comment any further.
In October 2018, Pamplona through an auction process, had decided to sell its stake in Cofense after being approached by CFIUS. The development took place 10 months after it acquired Cofense, along with BlackRock, Telstra Ventures, Adam Street Partners and other investors, in a $400 million deal.
With a 30% stake in Cofense, BlackRock is the front-runner to buy Pamplona’s stake in the deal that could be reached as early as this week, said sources.
Sources have however cautioned that it is possible that another bidder prevails or that negotiations fall through.
Sources have preferred the cover of anonymity given that negotiations are ongoing and are confidential.
In 2018, CFIUS had launched a pilot program under which filings for review for certain types of investments in some U.S. technology companies it deems to be of critical importance are no longer optional.