Time Warner Inc. owned by AOL Inc. will sell its social networking website Bebo for less than 2% of the price it paid for the company to Criterion Capital Partners LLC. AOL bought the site for $850 million and sold it for $10 million. The move gave AOL a tax benefit and saw its benefits increase this quarter from $275 million to $325 million.
“Criterion Capital Partners are specialists in facilitating growth plans and turnarounds,” AOL’s CEO Tim Armstrong said. “For AOL, the transaction will also create a meaningful tax deduction.”
The New-York based company was on the verge of shutting down Bebo or selling it and decided to sell the company. Facebook which has been popular in the social networking business along with MySpace owned by News Corp overtook Bebo on working and popularity. AOL paid $766 million in goodwill to for Bebo.
“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,” said Criterion Managing Partner Adam Levin.
“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 network said. “AOL is not in a position at this time to further fund and support Bebo in pursuing a turnaround in social networking.”