AOL snaps up Bebo for $850m

BEBO has been bought by internet company AOL for $850 million (€545m) cash.

The teenage social networking site, which has more than one million users in Ireland, is the third largest social networking site in the US.

However, the price paid for Bebo is small when compared with the $240m Microsoft paid for 1.6% of Facebook last year and the $580m News Corp paid for MySpace back in 2005.

Bebo, with 40 million members globally, is popular in Ireland and Britain, but it remains far behind MySpace and Facebook in both buzz and the size of its user base worldwide.

AOL, which is the internet division of Time Warner, the world’s largest media company, is understood to be seeking to make up for falling subscription sales by agreeing to buy Bebo. Social networking sites are seen as a valuable location for online advertising because members can post information about themselves and can then be targeted with products and services likely to appeal to them.

The big winners in the deal will be Bebo’s founder Michael Birch, a British entrepreneur, who still owns a big stake in the business and venture capital firm, Balderton Capital, which had a 15.7% stake in Bebo.

The proceeds of the sale due to Balderton Capital are about $140m (€90m), more than nine times the original sum invested.

Bebo will operate as a standalone unit within AOL.

Bebo has been rumoured to be for sale for some time and Microsoft and Yahoo were among parties linked with a purchase.