AOL said today it will pay $850 million in cash to acquire social media network Bebo.
Bebo, which has a global membership of over 40 million, is one of the largest social networks in Britain. It is ranked number one in Ireland and number three in the US, according to AOL, the Internet arm of Time Warner.
The acquisition is part of AOL's shift from a subscription-driven business to becoming a public website that generates income from building traffic and selling advertising.
AOL, which has unveiled 17 international Web sites over the last year and has plans to expand to 30 countries outside the United States by the end of 2008, said Bebo plans to launch in five countries this year.
As social networks such as Bebo have grown in popularity, so has their value to media companies as potential goldmines for online advertising dollars.
Facebook, which owns the Internet's second-largest social network behind MySpace, now arguably has a $15 billion market value, based on Microsoft's purchase late last year of a 1.6 per cent stake for $240 million.