Google paying $625m to buy Postini — big move to provide serious applications

postini.jpgGoogle said Monday it’ll pay $625 million in cash to acquire Postini, an online provider of email, web and other communications security products. Postini also helps companies comply with securities regulations by helping archiving their correspondence.

The move is significant because it lets Google bolster its hosted online applications for businesses, adding a security component to applications that have so far seen as somewhat flimsy — useful mainly for individuals, but not robust enough for actually running businesses. Google chief executive Eric Schmidt said in statement: “With the addition of Postini, our apps are not just simple and appealing to users — they can also streamline the complex information security mandates within these organizations.” More details on Google’s blog.

Postini, of San Carlos, Calif., serves more than 35,000 businesses and 10 million users worldwide, including investment bank Merrill Lynch. Its products include archiving, encryption, and policy enforcement — and can also be used for instant messaging, so covers most of Google’s communications offerings. Google also nabs the company before it filed for an initial public offering, which may have raised its value by millions more.

However, it isn’t clear why Postini had been waiting. Two years ago, the company said it was profitable, and that it was an IPO candidate. The company was founded in 1999, and originally sought to help companies fight spam. It has since focused on email security, and so is expected to help Google’s Gmail specifically.

Postini had raised $26 million in venture capital from Bessemer Venture Partners and Mobius Venture Capital. Postini’s acquisition looks to finally delivers a profit to Mobius, a venture firm that has struggled over the years without returning capital to its investors and eventually was forced to wind down. Notably, the Postini deal was led not by a Mobius partner, but by principal Ryan McIntyre.

The purchase is supposed to close by the end of the third quarter.