Yahoo in talks to buy Bebo for $1 Billion

Yahoo is rumoured to be working on an attempted takeover of Bebo, Britain’s most popular social networking site, which could turn its British-born founder into the next internet billionaire.
Yahoo, one of the first big online portals, is thought to be willing to pay as much as $1bn for the site, according to Silicon Valley gossip.

NewsCorp paid $580m for MySpace in 2005, in a deal that first drew the market’s attention to the phenomenon. Google paid $1.76bn for YouTube, the internet home video site, last November.

Bebo has around 25m users worldwide, compared with MySpace’s 100m or so registered users. Birch is rumoured to have turned down an offer from BT worth about £300m last summer. Viacom, the US media giant which was outbid for MySpace, is also believed to have made an offer last year. Bebo is backed by Benchmark Capital, the private equity firm.

Yahoo made a $1bn bid for Facebook, another fast-growing social networking site, last year. The offer was rejected by the site’s founder, Mark Zuckerberg.

Friendster, one of the first social networking sites, turned down an all-share offer from Google in 2003, which would have been worth about $1bn to its founders today. It has since drifted out of favour with internet consumers, with the monthly traffic on its site dwarfed by newer sites – such as Bebo. (Ouch!!)

Reported last week that Microsoft was in talks to buy Yahoo for a rumored $50 Billion, if this deal goes through Microsoft would significantly increase its online advertising market share which is now dominated by Google. The Redmond giant would own two of the biggest social networking properties on the web, Bebo and their very own Live Spaces.

Although, the Telegraph (who broke the news) isn’t exactly known for breaking tech M&A stories, and the rumor has an exceptionally weak source – “according to silicon valley gossip” the article says. That sounds like something the Telegraph’s correspondent overheard after ten or twelve cocktails last night at a party. And while I don’t doubt that Yahoo is sniffing around Bebo, $1 billion seems a tad high for the service.