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AOL to buy Bebo for $850 millon cash

Here’s an interesting development: AOL have announced the purchase of social network Bebo for $850 million in cash. Previous coverage didn’t even mention AOL as a potential buyer.

From BusinessWire:

With a total membership of more than 40 million worldwide, Bebo is a global social media network which combines community, self-expression and entertainment to enable its users to consume, create, discover and share content. Bebo is one of the leading social networks in the UK, and is ranked number one in Ireland and New Zealand, and number three in the U.S. Its users are heavily engaged and view an average of 78 pages per usage day. Bebo has approximately 100 employees operating in offices in the UK, San Francisco and Austin, TX.

The deal comes just one week after AOLs launch of Open AIM 2.0, an initiative that allows the developer community greater freedom to access the AIM network and integrate AIM into its sites and applications, and the announcement by Apple of a downloadable AIM application for the iPhone.

Under the terms of the agreement, AOL will acquire Bebo for $850 million in cash.

Bebo is the perfect complement to AOLs personal communications network and puts us in a leading position in social media, said Randy Falco, Chairman and CEO, AOL. What drew us to Bebo was its substantial and fast-growing worldwide user-base, its vision of a truly social web, and the monetization opportunities that leverage Platform-A across our combined global audience. This positions us to offer advertisers even greater reach and marketers significant insights into the desires and needs of consumers.

Allen Stern at CentreNetworks:

What does this mean for AOL? It brings their ad inventory for Platform-A skyrocketing upwards with a youth and young adult demographic. This is a good complement to their current AOL properties which tend to tick a bit further up the age chain. AOL also announced last month the launch of 20+ Web sites in 2008.

Search Engine Journal:

Bebo is based out of the UK, San Francisco and Texas and has become the social network of choice among British Internet users and those in commonwealths, being the #1 social network in Ireland and New Zealand.

With 40 milllion worldwide members, Bebo will introduce a new outlet for AOL’s Platform-A behavioral driven advertising, AOL search and AOL properties to grow in conjunction with (Bebo is currently a Yahoo advertising partner).

Will post up more coverage as it comes in.

Updates:

Om Malik:

The deal also shows the schizophrenic nature of my former employer, Time Warner. Jeff Bewkes wants to get rid of AOL (and Time Warner Cable) and focus entirely on his old Hollywood style businesses. Earlier this week he was happy to talk deal with Yahoo and get rid of AOL, which is going to through a major crisis, as reported by several other outlets. And at the same time they are spending $850 million in cash on Bebo. Maybe it helps AOL become a more sexy acquisition, or a spin-off candidate?

Charles Arthur in The Guardian:

But now the question is – as it always is – has AOL bought just after the wave has broken? News Corp’s acquisition of MySpace initially looked like a mistake, but now seems sensible. Do AOL and Bebo make a match made in heaven… or hell? After all, AOL’s tried an old-world merger. Now it seems it’s trying a new-world one.

Michael Arrington:

As an aside, and despite rumors of their possible sale, AOL is clearly putting a massive effort into transforming the company from a dial up broadband provider into a company has the competitive fire. The opening of AIM, mentioned above, is just one indication. The company has been releasing genuinely innovative new products and has also made a number of smaller strategic acquisitions over the last year or so. And there are lots more to come, apparently.

Mike Butcher:

Time Warner’s AOL has acquired leading social media network Bebo for $850 million in cash. It seems like a good move which will supercharge AOL’s advertising reach into social networking, and immediately put the heat on Microsoft, which has failed in social networking, and ailing Yahoo!, almost certain to be acquired itself very soon.