Hacked IT company Xplain falls into foreign hands

After the massive cyber attack, Swiss IT developer Xplain spared no effort. Now the company is being sold to a German investment firm. This raises many questions.

Reto Wattenhoff/ch media

Is this a considered step or a move forward? One thing is certain: Andreas Löwinger, head of the IT company Xplain, finally wants to leave history behind and start a new chapter.

Last year, Xplain made headlines overnight. In May 2023, Watson made the hacking incident of this mysterious company from Interlaken public, triggering an earthquake in Bern.

The company develops software in the field of internal security for numerous government agencies. The Play ransomware group allegedly stole approximately 900 GB of data in this attack. Because Xplain did not respond to ransom demands, cybercriminals posted hundreds of gigabytes of stolen data on the dark web, including confidential information and particularly sensitive personal data.

An administrative investigation later drew devastating conclusions about Xplain's cooperation with the federal government: a lack of expertise and safety precautions, coupled with a high degree of dependence and a friendly tone.

Xplain reputational damage. Löwinger had to lay off employees, and customers' reaction was uncertain. Canton Vaud even caused a stir by publicly terminating its contract with Xplain.

The Play hacking group allegedly stole approximately 900 GB of data in this attack. It was later discovered that approximately 430 GB of data had been compromised.Image: Shutterstock

New owner provides financial stability

Now Xplain wants to start a new chapter. And there was a loud bang. The owners handed over their life's work to the German investment company Chapters Group. It takes over Xplain through its Swiss subsidiary. Both parties agreed not to disclose details.

Good news: The new owner will take over all 60 employees. The company will also continue to operate independently and all projects will continue. Löwinger will serve as CEO on an interim basis. For Xplain, Chapters Group provides financial stability as a well-capitalized investor, he said. With a market capitalization of €500 million, the company should indeed be able to inject capital if necessary.

However, selling overseas is sensitive and may raise political eyebrows. Xplain produces software for Swiss in-house security. One example is the eneXs platform, which is used day and night by border guards and police. The app allows you to check passports, ID cards, residence documents, visas, license plates anytime and anywhere.

Tough questions arise

And this is exactly what a company that suffered a serious hack and is now being sold to a foreign listed company is doing? Mark Maurer thinks the question is legitimate. However, the managing director of the Swiss subsidiary said: “I am relatively relaxed.”

Chapters Group is a company subject to strict compliance rules and its data protection standards exceed those of Switzerland and the European Union. Maurer also noted that customers can securely access the software's source code. In any case, Xplain has no access to customer data.

The Swiss believe that fears that Xplain will be resold are unfounded. “We are being patient.” Maurer said Chapters Group differs from financial investors who want to see results after a year. “We’re not a tankless water heater,” Maurer promised. If a client is now unsure about an acquisition, he seeks discussions.

Does the federal government also think overseas sales have been relaxed? Despite all the assurances, investors still want to see returns and are not concerned about Switzerland's internal security. Share prices of companies listed on the Frankfurt Stock Exchange have only known one direction in recent years: up. Chapters Group has shown a strong record of acquisitions in the past.

Expectations from owners are correspondingly high, including some notable names. Spotify founder Daniel Ek holds nearly 11% of the shares. American investment legend Mitch Rales owns 15% of the company. He surprisingly joined Chapters Group in early 2022. He has talked about his motivation: He is looking for passionate founders with the potential to grow his investment 50 to 100 times over the next 30 years.

Spotify founder Daniel Ek holds nearly 11% of the shares.Photo credit: AP/Austin American-Statesman

“We stand by Xplain's history”

What if Xplain doesn't live up to the new owner's expectations? Maurer emphasized that the company underwent detailed scrutiny before the acquisition. He saw potential for growth. He also expects synergies from the approximately 40 software companies Chapters Group owns in Europe.

What about the tarnished image of the company that was hacked? “We support Xplain's history,” Maurer said. The fact that Xplain lost virtually no customers after the cyberattack is a “strong quality trait.” The company is much safer than its competitors.

After the hack, Xplain had to rebuild its entire IT infrastructure and change external operators. Later, an external audit inspected the company. This is common practice after a cyberattack of this scale and is a condition for further possible federal cooperation. The results also convinced the responsible federal cybersecurity office, the former National Cyber ​​Security Center (NCSC).

(aargauerzeitung.ch)

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