AOL Buying Bebo (Updated)

Updated There have been reports swirling for months that social networking company Bebo was trying to sell itself for $1 billion. Well, that valuation seems to be high – but not by much.

AOL just announced that it’s buying the UK-based company for $850 million in cash. It’s also worth noting that there is some discrepency on that pricetag, as Bebo investor Balderton Capital said that it’s selling its 15.7% stake for $140 million (i.e., closer to an $891 million pricetag).

Update: A Balderton spokeswoman says that the original investment agreement had some “additional provisions and entitlements” that effectively boosted Balderton’s ROI. She declined to comment further. 

The $140 million figure represents more than a 9x return on Balderton’s original investment, which was done at a post-money valuation of approximately $95 million.

AOL and Bebo held a press call earlier this morning, which contained everything you’d expect about the future being more abour community than technology, and how AOL isn’t worried that Bebo users will get pissed off about being monetized (sure, tell that to Facebook). A few other tidbits:

  • Bebo’s husband-wife founding team of Michael and Xochi Birch won’t be sticking around AOL for very long (if at all).
  • Bebo plans to soon expand into several non-English-speaking European markets.
  • Bebo had been in the market for new funding to support acquisitions, particularly in the contextual and behavioral search markets. But that ended once acquisition offers began coming in. No comment on earlier reports that Yahoo was an interested suitor (which is now 0-for-2 on such efforts).

You can read the AOL press release here.