[Posted on March 13, 2008 - 10:39 AM]
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DiggTime Warner Inc.'s [TWX] AOL division continued its march towards an advertising-supported format, agreeing to acquire social media networking Web site Bebo Inc. for $850 million.
San Francisco-based Bebo's Web site claims more than 40 million members worldwide. AOL said Bebo is particularly strong in the U.K. and among social networking sites ranks first in Ireland and New Zealand and third in the U.S. The company has about 100 employees spread among offices in San Francisco, Austin, Texas, and the U.K.
AOL officials said the purchase of Bebo allows them to offer advertisers greater reach online and give its marketer customers "significant insights" into what interests consumers. "Bebo is the perfect complement to AOL's personal communications network and puts us in a leading position in social media," AOL chairman and CEO Randy Falco said in a statement. "What drew us to Bebo was its substantial and fast-growing worldwide user-base, its vision of a truly social web, and the monetization opportunities that leverage Platform-A across our combined global audience."
AOL is banking on projections from analysts like eMarkerer who predict $4.1 billion will be spent worldwide for social network advertising by 2011, a substantial increase from the $480 million spent in 2006. The company has spent nearly $1 billion in recent years on advertising deals, creating a platform that can serve ads throughout its network.
Bebo, which is best known as the producer of the online video KateModern, said that being part of AOL would help it grow.
"AOL understands the shifting dynamics of the Web and has clearly demonstrated its commitment to leveraging the ever-increasing power of social networks," Bebo president Joanna 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."
AOL said it expects Shields to remain at the company running Bebo after the deal closes.
AOL was advised by Banc of America Securities LLC and a Deutsche Bank Securities Inc. team including Emmanuel DeSousa, Malcolm Morris and Jean Manas. Bebo was advised by Allen & Co. and a Weil, Gotshal & Manges LLP legal team led by partners Kyle Krpata, Dick Millard, Karen Ballack, Kenneth Steinthal, Helyn Goldstein, Amy Rubin and Jeffrey Osterman. - Lou Whiteman
