AOL to acquire Bebo social network for $850m

by Jennifer Whitehead, Brand Republic 13-Mar-08, 12:10

NEW YORK - AOL is to buy the teen social networking site Bebo in a $850m (£417m) cash deal, a move it said would give it a leading position in social media.

The surprise deal will create a network of around 80m users, AOL said. Bebo has a total membership of more than 40m worldwide, and claims status as the biggest social network in countries including Ireland and New Zealand, while it is ranked number three in the US and the UK.

The company has around 100 employees in offices in the UK, San Francisco and Austin, Texas.

In October last year, Bebo and AOL announced a deal to integrate the AOL instant messaging service AIM into Bebo profiles, showing whether the user is signed in and available to chat.

AOL has been in acquisition mode this year, completing a deal to takeover affiliate network buy.at in February and also Goowy Media, a widget technology firm, the same month. In total has also spent nearly $1bn on acquisitions in the online advertising area, including Adtech, Tacoda and Lightningcast.

Last week, AOL launched AIM 2.0, which will allow developers to access the AIM network and integrate AIM into sites and applications, including Apple's iPhone.

Randy Falco, chairman and CEO of AOL, said: "Bebo is the perfect complement to AOL's personal communications network and puts us in a leading position in social media.

"This positions us to offer advertisers even greater reach and marketers significant insights into the desires and needs of consumers."

Figures published by Emarketer forecast that online social network advertising spend in Western Europe will hit $860m in 2011, compared with $70m in 2006.