AOL to buy Bebo for $850m

AOL is to buy popular social-networking site Bebo for $850m (around £420m).

Bebo has a community of around 40 million members and is especially popular in the UK and Ireland.

Sixty per cent of Bebo's community are based in Europe, according to figures from comScore, and there were 11.4 million unique visitors from the UK to Bebo in January 2008.

It is the second most popular social network in the UK after Facebook, and the seventh most-visited site in this country, according to web monitoring firm Hitwise.

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

"What drew us to Bebo was its substantial and fast-growing worldwide user-base, its vision of a truly social web, and the monetisation opportunities," Falco continued.

Current Bebo president Joanna Shields will continue to run Bebo and will report to Ron Grant, AOL's president.

AOL is owned by Time Warner. Media companies have a history of buying into social networks - Rupert Murdoch's News Corp bought MySpace for $580m (about £285m) in 2005, a move that in retrospect looks very shrewd.

Analyst David Card of Jupiter Research was full of praise for Bebo.

"Bebo has a good youth focus with its social network, strong presence in the UK, and is doing smart things with more professional content," Card said.

However, he expressed doubts about whether AOL was the right company to help Bebo fulfil its potential, sayin that it was "not entirely clear what AOL brings to the picture these days".

Another analyst said it was a good move on AOL's part, allowing it to become a recognisable brand with a group of people who have always thought of the web as part of everyday life.

"Bebo's community is made up of children and teenagers that are literally growing up with social networking. AOL no doubt hopes that if it can capture them now, then once they have grown out of Bebo they will be well disposed to complementary AOL services and a receptive audience for future developments," said Ovum analyst Eden Zoller.

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