Huawei confirms Israeli vendor purchases

Alan Burkitt-Gray
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Israel-based deep packet inspection and database security companies bought by Huawei, will operate as part of European Research Institute

Huawei has confirmed reports that it has bought two Israel companies, HexaTier and Toga Networks, but has not disclosed the price. Independent reports suggest the company has paid over $190 million for the two.

The acquired businesses will become part of Huawei’s European Research Institute (ERI), a Huawei spokesman in China told Global Telecoms Business.

“Both companies [were] acquired in late 2016. Commercial terms [were] not disclosed,” the official added.

“Huawei confirms it has acquired Toga Networks and HexaTier … As a global ICT infrastructure provider, Huawei believes that openness and innovation are conducive to the development of the industry.”

Neither HexaTier nor Toga Networks have reported the sale. The two companies were owned by private equity and venture capital shareholders, according to their websites, which have not been updated.

HexaTier was originally GreenSQL but rebranded in January 2015. It specialises in cloud-hosted database security and compliance solutions for small and medium businesses. Headquartered in Tel Aviv, it also has offices in Irvine, California and Boston, Massachusetts.

A report in late December 2016, citing Israeli financial newspaper Calcalist, said Huawei had paid $42 million for HexaTier.

An unconfirmed report, citing the same Israeli newspaper, said in December that Huawei had paid $140 million for Toga Networks, which is based to the north-east of Tel Aviv and offers advanced technology research – in areas such as deep packet inspection – to the IT and telecoms markets. The company’s website lists seven chief technology officers

In June 2016 the Wall Street Journal reported that Huawei was using Toga’s engineers to develop “a range of software and equipment related to networking, storage and information security, including encryption”, citing “former and current employees” of Toga.

Huawei launched its ERI in 2015. The company said at the time that the institute, to be located in Leuven, Belgium, would oversee 18 R&D sites in eight countries and that it “represents a milestone in the company’s global innovation strategy”.

Even though the Huawei official said that the pair of acquisitions adds “to our existing business investments in the region, which include significant operations in UAE, Kuwait, Saudi Arabia and Egypt”, it seems clear that the management of the unit through the Belgium-based ERI will keep a distance between the Israeli operations and the Chinese vendor’s other interests in the Middle East.

The ERI has operations in Belgium, Finland, France, Germany, Ireland, Italy, Sweden and the UK, employing a total of 1,570 people, according to Huawei.