New York – Two years after paying $850 million for Bebo, AOL
said on Thursday that it has sold the social network to Criterion Capital
Partners for an undisclosed sum. Some analysts peg the price at around $10
million, while PE Hub has it closer to $5 million. A source told The Wall
Street Journal that the final figure was "exceptionally uninspiring"
with almost total "value destruction."
Either way, AOL — which will
record an income tax benefit of up to $325 million this quarter — rids itself
of a venture that never was able to compete with the likes of Facebook and
MySpace, and failed to fulfill the company’s goal of driving more traffic to
"Bebo, unfortunately, is a business that has been
declining and, as a result, would require significant investment in order to
compete in the competitive social networking space," wrote Jon Brod, executive
vice president of AOL Ventures, in an April memo to employees.
"AOL is not
in a position at this time to further fund and support Bebo in pursuing a
turnaround in social networking."
AOL had planned to shut down the social
network if it couldn’t find a buyer.
Bebo currently counts approximately 5
million unique users in the U.S., compared with 130.4 million for Facebook,
according to comScore.
The deal is just the latest for AOL, which in recent
months also sold its ICQ instant messaging service and affiliate marketing