SoftBank, Mnuchin Weigh Deal to Salvage $800 Million Cyber Firm
(Bloomberg) -- Former US Treasury Secretary Steven Mnuchin and SoftBank Group Corp.'s Vision Fund are discussing a deal to salvage Cybereason Inc., a onetime Silicon Valley unicorn that has lost most of its value amid boardroom turmoil.
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A group of four investors — Mnuchin's Liberty Strategic Capital, the Vision Fund, All Blue Capital and Andra Capital — plans to put about $100 million into Cybereason and increase their control, according to people familiar with the matter, who requested anonymity as the details aren't public.
The company's board has approved the deal but it has yet to close as the investors carry out due diligence and the transaction may still fail, one of the people said.
Investors have poured more than $800 million into La Jolla, California-based Cybereason but the company is loss-making and has become mired in internal rancor. Chief Executive Officer Eric Gan — a former SoftBank vice president — sued Mnuchin and the Vision Fund earlier this month, alleging they had stymied his efforts to raise the funds needed to stave off bankruptcy in order to protect their own stakes. They have disputed the lawsuit, saying it lacked any merit.
Representatives for the four investors declined to comment. Gan also didn't comment.
The four investors would each have a right to nominate a director to a newly-constituted board of five members under the terms of the plan, the people said. The group would also have the right to propose executives, the people said.
If the deal is successful, directors will begin a review of strategic options for Cybereason, including a potential sale or initial public offering, the people said.
Gan has opposed the deal and pointed out multiple issues with it to the board, the people said. He proposed an alternative $150 million fundraising that directors rejected, they said.
Cybereason sells technology that it says uses artificial intelligence to predict and defeat cyber attacks. The company was potentially worth billions of dollars at one point but its valuation later tumbled to about $300 million, Bloomberg reported last year.
Under Gan, Cybereason announced a merger in November with Chicago-based cybersecurity firm Trustwave Holdings Inc. That deal has yet to close, the people said. A Trustwave spokesperson declined to comment.
SoftBank, the technology firm led by billionaire founder Masayoshi Son, is exposed to Cybereason in multiple ways. The Vision Fund, its investment arm, is helping to lead this latest deal while the Tokyo-based company is also a significant standalone investor. The Vision Fund is also an investor in Mnuchin's Liberty, which led a $275 million fundraising for Cybereason in 2021, according to a Financial Times report at the time.
--With assistance from Sarah McBride.
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