Israel-based Aladdin Knowledge Systems announced today that the software security company has agreed to be acquired by an investor group lead by private equity firm Vector Capital, which specializes in the technology industry, for about $160 million.

Aladdin was covered on Israel Innovation 2.0 in August 2008 after its eSafe product was awarded a Checkmark Premium Level Anti-Spam Certification by West Coast Labs, an independent test facility for information security products and services. Together, Aladdin’s products eSafe, HASP and eToken offer software DRM security, online protection and secure network access. Despite quality security software the company’s stocks never reached its potential.

Jasmine Holdco LLC, an affiliate of Vector Capital, had been in talks with Aladdin on and off since last summer before this agreement was finally reached.