AOL Inc. unloaded its social networking site Bebo to turnaround specialist Criterion Capital Partners LLC, exiting a disastrous investment for the company, The Wall Street Journal reported Thursday.
Terms of the deal were not disclosed, but a person familiar with the situation said the price was a small fraction of the $850 million AOL paid for the site two years ago.
For its part, AOL said that following the transaction it will treat Bebo common stock as “worthless” for U.S. income tax purposes, according to a filing with the Securities and Exchange Commission.
The company’s current tax basis in Bebo — which stands for “Blog Early, Blog Often” — is about $750 million.
AOL said it expects to record a deferred tax asset and corresponding tax benefit of $275 million to $325 million to its tax provision during the second quarter.
“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.
The firm specializes in turning around companies with revenue between $3 million and $30 million.