AOL to buy Bebo for $850 million, actually a bargain

Time Warner Inc. (NYSE: TWX) doesn't look like it is slowing down on the deal front for AOL. Just when everyone is wondering if AOL will be sold, AOL has announced that it is paying out $850 million to acquire the social networking site Bebo, "a global social media network which combines community, self-expression and entertainment to enable its users to consume, create, discover and share content."

Bebo is also one of the leading social networks in the U.K. and is supposed to ranked number three in the U.S. Its users view an average of 78 pages per day.

Bebo has a total membership of more than 40 million worldwide. The press release notes that together with the AIM and ICQ network, AOL will have 80 million unique users in the world of social media.

For $850 million in cash as the purchase price, AOL probably just added a serious site that it can convert rapidly into advertising profits with Platform-A (Advertising.com and more). Its giant ad platform that still ranks number one on many ad metrics.

So while $850 sounds like a lot, it may well prove to be a bargain ultimately for AOL.