AOL has sold its social networking site Bebo to US-based merchant banking and financial advisory firm, Criterion Capital Partners. The deal was reportedly closed for less than $10 million. AOL had acquired Bebo by paying $850 million in March 2008. with tough market competition from frindster & Facebook, which over run Bebo made AOL to accept the loss of allmost 85%.

“AOL is not in a position at this time to further fund and support Bebo in pursuing a turnaround in social networking,” the company recently informed its employees through an email. “AOL is committed to working quickly to determine if there are any interested parties for Bebo and the company’s current expectation is to complete our strategic evaluation by the end of May 2010.”

Launched in 2005, Bebo currently has a strong user base across the globe, including in US, UK, Ireland, Australia, New Zealand, Canada, Poland, France, Germany, Italy, Spain, India, Pakistan and Netherlands.

“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,” Adam Levin, managing partner, Criterion Capital Partners, has said.

“Criterion Capital Partners are specialists in facilitating growth plans and turnarounds, and are well placed to drive Bebo’s effort to strengthen its foothold within the highly competitive social networking arena,” Tim Armstrong, chairman and chief executive officer, AOL, has said.