Mumbai: Google Inc., the world''s largest internet search engine, will acquire e-mail security company Postini for $625 million to expand its services for businesses.

San Carlos, California-based Postini is a closely held company that sells software to encrypt and archive e-mail and instant messages. The acquisition is expected to close by the end of the third quarter, the companies said in a statement.

Postini supplies on-demand communications security and compliance solutions to more than 35,000 businesses and 10 million users worldwide.

Google said the deal could enable it provide organisations with more hosted services similar to its Google Apps package, which includes its e-mail service Gmail, Calendar, and Talk, its messaging service.

Google plans to use the technology to boost the security and compliance features of Google Apps, its hosted suite of productivity applications.

With Postini''s security software and Google''s Apps, corporations can use the software without putting the onus on their administrators to install and maintain traditional applications packages.

Google said Postini will become a wholly-owned subsidiary. The deal is subject to customary closing conditions and is expected to close by the end of the third quarter.

Google is encouraging small businesses to adopt Gmail along with software for calendars, spreadsheets and instant messaging. More than 100,000 business customers use the Google Apps software suite, the company said.

Postini is Google''s third-biggest acquisition since it agreed to buy DoubleClick Inc. in April for $3.1 billion and completed a $1.65 billion purchase of YouTube Inc. in November.

The acquisition of Postini should also give Google another leg up on rivals Yahoo Inc. and Microsoft Corp., neither of who have made such strides in securing hosted software.