AOL Sells Bebo to Criterion Capital Partners

Little more than two years after it acquired the social network for $850 million, AOL announced today it is selling Bebo to Criterion Capital Partners (CCP) for an undisclosed fee. In a memo sent to staff today, AOL CEO Tim Armstrong said the sale has been completed, and that Bebo’s assets and global operations have been transferred to its new owner.

“The deal will allow Bebo’s users to remain within the social platform that they know and love, while enabling a new owner to bring new possibilities and experiences to bear. Criterion Capital Partners are specialists in facilitating growth plans and turnarounds and are well placed to drive Bebo’s effort to strengthen its foothold within the highly competitive social networking arena,” Armstrong wrote.

According to reports, the fee could be anywhere between $2.5 million or $10 million, meaning at best estimate $840 million was wiped off Bebo’s value in just 27 months.

Upon announcing Bebo would be sold or closed in April, Armstrong said AOL was not prepared to invest the capital necessary to turn the service around in light of its declining user base and ad revenue. “AOL is not in a position at this time to further fund and support Bebo in pursuing a turnaround in social networking,” he said.

However, Adam Levin, managing partner at CCP suggests the firm still sees potential in the service. “The young, highly active user base, revenue history, presence in countries throughout the world and solid technical infrastructure make it an attractive media platform both as a standalone entity and in the context of our broader investment objectives,” he said.

AOL has repeatedly stated its intention to focus on building quality content, and to attract premium advertisers to underwrite it. Typically, social networks have had difficulty attracting ad spend from big brands, and – as the company noted in April – require scale and reach to monetize successfully.

Bebo has been hemorrhaging users since the AOL acquisition, even in the U.K. where the majority of its user base lies. According to data from comScore, the network attracted around 8.5 million unique visitors in May 2009, and just 4.7 million in February 2010, representing a decline of almost 50 percent in just eight months

According to a press release issued by CCP this morning, the company intends to retain a San Francisco headquarters for the service, though not the one it currently occupies. Despite a consistent decline in traffic since AOL acquired the site in March 2008, CCP says it maintains a strong user base across the globe, including in the U.S., the U.K., Ireland, Australia, New Zealand, Canada, Poland, France, Germany, Italy, Spain, India, Pakistan and the Netherlands.

CCP says the acquisition was lead by Levin, in partnership with business strategist Paul Abramowitz and Web entrepreneur Richard Hecker. The firm describes itself as “an integrated advisory and consulting firm serving U.S. and international clients who seek the preparation and implementation of APOs, outsourced business development, acquisitions or marketing strategies.”