The deal will give AOL access to Bebo's membership of more than 40 million users and follows a number of moves by AOL in recent months to bolster its position.
It has spent nearly£500m on online advertising acquisitions such as Adtech, buy.at, Lightningcast, and Quigo to create Platform A, a combined product focused on helping marketers build online brands.
The company has also launched 17 international web sites this year and plans to expand to 30 countries outside the US by the end of 2008. Bebo has said it will launch in five countries this year and this is likely to feature prominently in AOL's expansion plans.
Bebo is one of the top social networking sites in the UK (with 11.4m users), along with Facebook and Myspace. It is the most used in Ireland and New Zealand and third most popular in the US. The site's core demographic is 13 to 24 year olds, and its recent partnership deals with UK broadcasters such as the BBC, Channel 4 and ITV have seen it add professional content to its offer.
By adding Bebo to its Aim and ICQ personal communications networks, AOL will have a network of approximately 80 million users.
Chairman and chief executive of AOL Randy Falco said: “Bebo is the perfect complement to AOL's personal communications network. We will be able to offer advertisers even greater reach as well as offering marketers significant insights into the desires of customers.”
Bebo employs 100 employees in offices in the UK, San Francisco and Austin Texas.