US private equity firm AE Industrial Partners is set to acquire Israeli cyberattack company Paragon Solutions for up to $900 million. Sources close to the matter have informed that the deal involves an immediate payment of $450 million, with the remainder based on future milestone payments. Brig founded Paragon Solutions. Gen. (res.) Ehud Schneorson, former IDF 8200 intelligence unit commander, and former Prime Minister Ehud Barak. The company’s leadership includes Schneorson as chairman, CEO Idan Nurick, and founders Igor Bogudlov, Liad Avraham, and Liran Elkayam. The immediate payment will see 20% allocated to Paragon’s 400 employees, while 30% will be divided among its five founders.
The remaining funds will go to investors, including the US venture capital fund Battery Ventures and the Israeli venture capital fund Red Dot, both major stakeholders. Paragon Solutions operates under the close supervision of Israel’s Ministry of Defense.
Paragon’s new market expansions
The ministry has approved the deal, which has not faced political resistance despite initial concerns due to Barak’s involvement. AE Industrial Partners plans to integrate Paragon into its portfolio company REDLattice, a defense integrator that customizes projects for the US Department of Defense and other English-speaking countries. This acquisition will enable Paragon to expand its market footprint in the UK, Ireland, Australia, New Zealand, Canada, and the US.
Paragon will continue to operate as an Israeli company, with a provision in the deal allowing the export of its cyberattack technology to the US. The company has developed notable software such as Graphite, a Trojan horse capable of extracting data from encrypted messaging apps like WhatsApp, Facebook Messenger, Signal, and Telegram. Unlike other Israeli cyberattack companies, Paragon was founded with US investment and operates in 34 democratic countries with strict adherence to local legal systems and minimal invasion of privacy.
The company’s technology has already been adopted by Singapore’s US Drug Enforcement Administration (DEA) and security authorities. According to reports, Paragon’s technology has replaced that of other Israeli companies blacklisted in the US. The acquisition of Paragon Solutions mirrors other significant cyber deals in Israel’s recent history, showcasing the country’s prominence in cybersecurity.
