BLK BlackRock Inc

By Dawn Lim and Will Louch 

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.

U.S. officials last year asked Pamplona to sell its minority stake in Cofense by a July 19 deadline. Pamplona has since failed to find a buyer by that date. The parties in violation of the sale order, including Cofense and Pamplona, now face fines each day they fail to find a buyer for the stake.

The firm and Cofense are in "material breach" of that agreement, according to an email that Cfius sent Pamplona and Cofense last week.

Cofense simulates and detects attacks transmitted via email to help companies deal with security threats. The Leesburg, Va.-based firm counts U.S. corporations among customers.

Several fund investors of Pamplona have been wealthy Russians. One is Mikhail Fridman, according to people familiar with the matter. Mr. Fridman, a founder of Russian conglomerate Alfa Group, has made his fortune in Russia's retail, energy and telecommunications sectors.

Through a spokesman, Mr. Fridman said that his understanding was that Cfius was concerned about the general level of foreign ownership in Pamplona, and not specifically with him.

Cofense is powerless to push a deal without the cooperation of Pamplona and a trustee who is overseeing the sale process. Cofense's valuation has been falling during a troubled sales process, according to people familiar with the matter.

Pacific Investment Management Co., Cofense executives, BlackRock and at least one other buyer group explored buying Pamplona's stake ahead of the deadline, people familiar with the matter said. None of the bids have led to a deal so far.

Various parties expressed interest in buying Pamplona's stake in the past two weeks, other people said.

Pamplona reached out to BlackRock to restart talks in recent days in an attempt to resolve the situation quickly, one of the people said.

--Kate O'Keeffe contributed to this article.

Write to Dawn Lim at dawn.lim@wsj.com and Will Louch at william.louch@wsj.com

(END) Dow Jones Newswires

July 31, 2019 13:38 ET (17:38 GMT)

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