Fight Over Security Firm Stake Rages On -- WSJ
August 01 2019 - 3:02AM
Dow Jones News
By Dawn Lim and Will Louch
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 1, 2019).
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
August 01, 2019 02:47 ET (06:47 GMT)
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