New York — Internet colossus Yahoo is rumored to be working on an attempted takeover of the most popular social networking site in Britain, Bebo, and is willing to pay up to $1 billion to seal the deal to strengthen its disappointing social networking standing, according to a published report.
Bebo, which was founded in 2005 by the U.K.’s Michael Birch and his American wife Xochi, has since grown into one of the biggest meeting places on the internet, and has become a major rival to MySpace in the UK as the most popular social networking site, which was bought by Rupert Murdoch’s News Corp. for $580 million in 2005.
Google paid 1.76 bln US$ for YouTube, the internet home video site, last November.
On a global basis, MySpace is still around four times the size of Bebo. Bebo’s 25 million users worldwide compare with 100 million for MySpace, it said.
The newspaper said the possible bid comes amid a flurry of internet-related deals, which culminated last week with Microsoft Corp’s USD 6 billion acquisition of aQuantive, an online advertising technology business.
In April at the Web 2.0 Summit in San Francisco, Jeff Weiner, executive vice president of Yahoo’s network division, said Yahoo needs to attain a stronger position in social networking.
Yahoo executives have publicly acknowledged that the company’s Yahoo 360 social networking site has failed to achieve expected levels of popularity. Yahoo has already shown its keenness to break into the social networking market with a bid to buy out Facebook last year, also for $1bn, which fell through.
It is rumored that Bebo co-founder Birch turned down a £300m offer from BT and a similar bid from Viacom last year, and Michael Birch has said in the past that he would rather float Bebo than sell it.
But analysts believe the time to sell is now, as a flurry of Internet deals has pushed up the shares of small but fast-growing Internet players.
Viacom Inc., which was outbid by News Corp for MySpace, is also said to have made an offer for Bebo last year, according to a report in a U.K. newspaper.
The Microsoft deal has cast further doubt on speculation that the software giant may seek to buy Yahoo. In early May, The Wall Street Journal reported that the two companies had been discussing a possible merger but that the talks had led nowhere.
Bebo has a particularly strong following in the U.K., where in mid-April it ranked as the eighth most popular Web site with 1.27 percent of all visits, one spot below MySpace, which ranked seventh with 1.34 percent, according to Hitwise.
The company has recently hired Angel Gambino, former vice president of commercial, strategy and digital at MTV, as vice president of music, and Joanna Shields, former Google EMEA managing director of strategic partnerships, as international president.
Officials at both Yahoo and Bebo were not immediately available for comment.