AOL Grabs Social Networking Site Bebo For $850 MillionAOL Grabs Social Networking Site Bebo For $850 Million

AOL has agreed to acquire social networking site Bebo for around $850 million in cash.

AOL announced Thursday that it plans to buy the company to round out its portfolio and step into social networking. Bebo could complement AOL's AIM and ICQ personal communications networking and increase AOL's user base to 80 million.

"This is a tremendous acquisition and one I think is game-changing for AOL," said Randy Falco, AOL chairman and CEO, during a conference call.

Falco said that AOL is eager to acquire Bebo's growing user base of 40 million people around the globe. The company's focus on media also appealed to AOL, which spent about six months negotiating the acquisition.

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

Bebo relies on users to create, discover, and share content. It employs about 100 people in San Francisco, Austin, Texas, and the United Kingdom. Its focus is on entertainment and self-expression. The company boasts heavy user engagement with an average of 78 page views and 33 minutes spent on the site by each user each day. The company also works with major media outlets on content distribution.

Bebo's current President, Joanna Shields, will continue running Bebo, while reporting to Ron Grant, president and COO of AOL.

"Bebo's dynamic management team recognizes that the Internet is less about destination and more about connecting people, culture, and lifestyles," Grant said. "This acquisition supports our key objectives -- accelerating the growth, engagement, and monetization of one of the world's most engaged online communities."

AOL said it has launched 17 international Web sites over the last year and it plans to expand into 30 countries by the end of 2008. Bebo also announced plans to launch in five new countries this year.

Last week, AOL launched Open AIM 2.0, which gives developers increased access to the AIM network and allows integration of AIM into other sites and applications. Also last week, Apple announced an AIM application for the iPhone.

"AOL understands the shifting dynamics of the Web and has clearly demonstrated its commitment to leveraging the ever-increasing power of social networks," Shields said. "With one and the same vision in this area, it was a natural progression for Bebo to join AOL, and we look forward to working together to continue to expand the online social experience globally."

Time Warner is reportedly considering whether to spin off AOL, which is trying to compete against Microsoft and Google.