AOL is on the verge of selling off Bebo, the social-networking site it acquired for $850 million (£570m) in 2008. According to the Wall Street Journal, AOL will offload the site for around $10 million (£7m) to a group of Californian angel investors, Criterion Capital Partners, that specialises in revitalising underperforming companies.
Neither AOL nor Criterion have commented on the reports, though industry experts believe a deal could be reached between the two parties by the end of this week.
AOL announced in April that it planned to sell off Bebo, or close the social-networking site if it couldn't find a buyer.
"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," said Jon Brod, executive vice-president of AOL Ventures, the independent venture capital division of the company. "AOL is not in a position at this time to further fund and support Bebo in pursuing a turnaround in social networking."
The WSJ said that although the exact terms of the deal had not been disclosed, one person close to the negotiations said it was "an exceptionally uninspiring number" with "almost total value destruction".
Last month, Michael Birch, who co-founded Bebo with his wife Xochi, ruled out any plans to buy back the social-networking site. He said he expected the site to sell for substantially less than AOL paid for it, and that social gaming companies could be interested in snapping up Bebo in any fire sale.
“Most social networks have gone into gaming and I think somebody will buy Bebo from AOL as it still has still has a lot of unique users a month and that’s valuable,” he said. “I don't think AOL will get a huge amount of money for it – I think the absolute ceiling price is £50 million ($75m).
"It wouldn’t surprise me if a company in the social gaming space, a company like Zynga, snapped it up.”
AOL has struggled to breathe new life in to Bebo since it acquired the site two years ago. Rival social-networking sites, such as Facebook and Twitter, have grown in popularity, while older services, including one-time rival MySpace, have failed to keep pace.
AOL was itself the subject of an ill-fated takeover during the dotcom boom, when it was bought by TimeWarner in 2000 for $164 billion. The value of the company plummeted when the dotcom bubble burst, and AOL was eventually spun off as a separate entity last December.
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