AOL shocks market with Bebo buyout

 

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By Stuart Turton

Posted on 13 Mar 2008 at 14:16

AOL has pulled a shock by agreeing to buy social networking site Bebo for $850 million.

Rumours had long circulated that Bebo was up for sale, with a potential price tag of around $1 billion mooted, however, its purchase by AOL has still caught many analysts by surprise.

The acquisition comes as AOL attempts to push further into social media following the launch of Open AIM 2.0, its attempt to give developers greater access to its instant messaging service.

The companies claim that Bebo will bring around 40 million users with it, significantly expanding the possible audience for AOL's advertising platform which has been bolstered by nearly $1 billion worth of recent acquisitions.

Bebo also supports Google's OpenSocial and Facebook's developer platforms, broadening the company's technology base.

"What drew us to Bebo was its substantial and fast-growing worldwide userbase, its vision of a truly social web, and the monetisation opportunities," says Randy Falco, chairman of AOL. "This positions us to offer advertisers even greater reach and marketers significant insights into the desires and needs of consumers."

The company expects the deal to be completed within the month.