Time Warner Inc's AOL is to buy social networking website Bebo for about €540m.
Bebo, which claims a global membership of about 40 million users, is the leading social network site in Ireland, it said.
It is number three in the US behind News Corp's MySpace and Facebook.
The two companies had spent the last six months hashing out the deal, the executives said.
AOL President Ron Grant said Bebo's heavy focus on media and international interest had made it particularly attractive.
The purchase comes amid a wholesale transformation of AOL from a dial-up Internet provider to an online advertising powerhouse.
AOL aims to protect against the prospect of bigger rivals as Microsoft Corp pursues a deal to buy Yahoo Inc and following Google's purchase of DoubleClick.
'This is a tremendous acquisition and one I think is game-changing for AOL,’ AOL Chairman and CEO Randy Falco said.
‘Bebo will be the cornerstone of our strategy to transform online experiences for advertisers, media companies and consumers,’ Mr Falco said.
AOL said Bebo would help round out its personal communications offerings, now comprised of AOL Instant Messenger and ICQ, two popular services that let users send quick text, video and audio correspondence.
Despite its global popularity AOL has not had much success turning that into a business.
AOL said its advertising system is well positioned to turn social networks into a thriving business despite difficulties its rivals face.
Google, which is the search advertising provider for MySpace, expressed difficulties in ‘monetizing’ MySpace's traffic.
Bebo President Joanna Shields will continue to run Bebo and will report to Grant after the transaction closes.
Falco declined to comment on what multiple of sales or earnings AOL may have paid but defended the price, comparing it with the €10 billion valuation of Facebook implied by the €153 million Microsoft paid for its 1.6 percent stake.
Facebook has around 67 million unique users.
