Time Warner's AOL internet division is to buy social network Bebo for $850m in cash, bolstering its consumer internet offerings.
Bebo, which claims a global membership of about 40 million users, is one of the top social networks in Britain and market leader in Ireland and New Zealand, it said. It is No. 3 in the US behind News Corp's MySpace and Facebook.
European venture capital Balderton Capital said it had agreed to sell its 15.7% in Bebo to AOL. It is set to make about $140m from the deal, more than nine times the original sum invested.
Balderton is the only institutional investor in Bebo. It provided first round financing of $15m in May 2006 to assist Bebo to develop its business model.
'AOL, at its core, is a way for people to connect,' AOL President Ron Grant said. 'We need to get back to our roots,' he added.
Grant said Bebo's heavy focus on media and international interest had made it particularly attractive. It already has a service in Poland and is set to launch in France, Germany, Italy, Spain and the Netherlands in the next five or six months.
The purchase comes amid a wholesale transformation of AOL from a dial-up Internet provider to an online advertising powerhouse. It has spent nearly $1 billion to create one of the biggest third-party display ad units, Platform-A.
AOL aims to strengthen itself against the prospect of bigger rivals as Microsoft Corp pursues a deal to buy Yahoo and following Google's purchase of DoubleClick.
AOL said Bebo would help round out its personal communications offerings, now comprised of AOL Instant Messenger and ICQ, two very 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.
