(Bloomberg) -- US private equity firm Francisco Partners said it’s no longer the owner of troubled technology vendor Sandvine, which was blacklisted by the US government earlier this year for supplying mass surveillance and censorship technology.
Sandvine has been in a state of upheaval since late February, when the US Commerce Department placed it on a blacklist for providing “mass web-monitoring and censorship” technology to the Egyptian government. The company, originally founded in Canada, was acquired by San Francisco-based Francisco Partners and combined with Procera Networks in 2017, in a deal worth $444 million.
Late on Thursday, Francisco Partners spokesman Whit Clay said in an emailed message that Francisco Partners “no longer owns the business.” Clay declined to elaborate on the change. It’s unclear who owns Sandvine now, but the company has been in talks with some of its lenders to address upcoming debt maturities of about $450 million due in 2025, Bloomberg reported in March.
Sandvine said in a statement in late February that it was “working closely with government officials to understand, address and resolve their concerns.” Company representatives didn’t respond to multiple requests for comment about the change to its ownership.
In a separate development, Sandvine has recently carried out mass layoffs that may amount to hundreds of jobs lost internationally, according to four people familiar with the matter who asked not to be identified because they aren’t authorized to speak publicly. Employees working on research and development and software engineering, including some at management level, were among those let go from offices in India and Sweden, adding to earlier job cuts affecting employees in the US and Canada, they said.
The company didn’t respond to requests for comment on the layoffs.
In February, the Commerce Department’s Bureau of Industry and Security added Sandvine to its “Entity List.” It said the company’s deals in Egypt had helped the government “block news as well as target political actors and human rights activists,” according to a notice published in the Federal Register. Such activities were “contrary to the national security and foreign policy interests of the United States,” the notice added. American suppliers are prohibited from dealing with companies on the trade blacklist unless they have a special license to do so.
Financial difficulties have posed an existential threat to Sandvine’s operations, leaving the company’s executives and lenders planning options for a substantial restructuring, according to the four people. The company didn’t respond to requests for comment on a potential restructuring.
Sandvine specializes in what’s known as deep-packet inspection technology, which can be used to monitor internet traffic passing between networks. The technology can be customized to block out spam and viruses. But it can also be deployed to block millions of websites and messaging apps and carry out covert surveillance of internet activity.
Inclusion on the blacklist all but killed the company’s efforts to win contracts with some US companies such as AT&T Inc., T-Mobile US Inc., Verizon Communications Inc. and Comcast Corp.,, according to two people familiar with the matter. The company didn’t respond to requests for comment on the impact of the blacklist on its efforts to win business.
Some US-based customers refused to communicate with the company following the blacklisting, fearing that they could fall afoul of the US government’s sanctions, the two people said.
AT&T said it had no record of purchasing equipment from Sandvine. T-Mobile said it had not dealt with the company since 2019. Verizon and Comcast did not respond to requests for comment.
Meanwhile, Sandvine was left with a stockpile of equipment stored in the US that it could not export or install, two of the people familiar with the company’s situation said. The company also struggled to build new equipment because it has been unable to obtain essential components manufactured by US companies such as Dell Technologies Inc. and Intel Corp.
The company didn’t respond to requests for comment on the trapped stockpiles.
Sandvine executives were said to have been blindsided by the Commerce Department’s move, according to two people familiar with the matter. A leadership delegation had been attending Mobile World Congress in Barcelona for meetings with top customers when the blacklist announcement appeared in the US Federal Register. The team, including Chief Executive Officer Lyndon Cantor, had to cancel the meetings and board flights back to the US to handle the fallout, the two people said.
The company didn’t respond to requests for comment on executives’ response to the blacklisting and its disruption to their schedules.
Sandvine has since been working with legal advisers to convince the US government it should be removed from the entity list.
Over a period of several years, Sandvine struck controversial deals with several autocratic governments, including in Belarus, Egypt, Eritrea, the United Arab Emirates and Uzbekistan. The company’s equipment was frequently used in these countries to censor content on the internet, such as by blocking independent news or social media websites, Bloomberg News previously reported. Sandvine had made sales worth more than $30 million in Egypt, including to state-owned Telecom Egypt, Vodafone Egypt and to Egypt’s Ministry of Defense and the National Telecom Regulation Authority.
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