AOL - Sold Bebo which it had acquired for USD 850 million for less than USD 10 million

[ny times] AOL’s $164 billion acquisition of Time Warner in 2000 is widely remembered as one of the most disastrous deals in corporate history.

By comparison, AOL’s acquisition of the social networking site Bebo for $850 million two years ago was tiny. But relatively, it proved to be as much of a fiasco.

On Thursday, AOL announced that it had finally unloaded Bebo to Criterion Capital Partners, a private equity fund based in Los Angeles. The price was not disclosed, but some reports peg it at $10 million or less, while others quote anonymous sources describing the price as an “exceptionally uninspiring number.”

On Twitter, even Steve Case, the founder of AOL who engineered the Time Warner deal, felt inclined to take a potshot: “AOL buying Bebo for $850 million and then selling two years later for $10 million doesn’t seem like a winning strategy,” Mr. Case wrote.

When AOL bought Bebo, the social network had millions of devoted users and plenty of momentum. The chief executive of AOL at the time, Randy Falco, called it a “game changing acquisition” that would turn AOL into “a social media powerhouse.”

It did’t turn out that way, as Bebo has been all by eclipsed by the continuing rise of Facebook. At the time of the deal, AOL was still owned by Time Warner. Now, AOL is independent and under a new management team that is struggling to engineer a turnaround. Bebo was little more than a distraction, and AOL announced two months ago that it was planning to sell it.

“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,” the AOL spokeswoman Trish Primrose said in an e-mail message. “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.”

So is there any upside of the sale for AOL? Yes. A big loss that AOL can turn into a “meaningful tax deduction,” Ms. Primrose said.

AOL Unloads Social Networking Site Bebo