Michael and Xochi Birch made an estimated $600 million (£295 million) yesterday after the sale of their 70 per cent stake in Bebo, the social networking site, to the AOL division of Time Warner for $850 million in cash.

The Briton and his Californian wife set up Bebo – their sixth internet business – in 2005 and are not expected to remain with the company, which is the second most popular social networking site in the UK and the third globally after MySpace and Facebook.

Joanna Shields, the Bebo president, described the couple as “serial entrepreneurs” who would probably move on to develop “some really exciting new venture”. She added: “Can you imagine the success they have experienced today?”

The Bebo founders – Michael is 37 and Xochi 36 – met in London, but they and their family live in San Francisco.

Mr Birch told The Times two years ago that he was “not looking to sell” before his wife added quickly that “it wouldn’t be bad” if they netted a large windfall.

No financial data regarding Bebo’s performance was released yesterday, although Randy Falco, chairman and chief executive of AOL, contrasted the price that Time Warner had paid with the $260 million that Microsoft paid for a 1.6 per cent stake in the $15 billion-rated Facebook. “We got an excellent asset at a good price,” Mr Falco said. Bebo is thought to be profitable.

News Corporation, the parent company of The Times, acquired MySpace for $580 million in 2005, when it had slightly more than 25 million monthly users. Bebo has 40 million users. Facebook is thought to have generated $100 million in revenues in 2007, which is likely to represent a benchmark for Bebo.

Bebo had been up for sale for several months, as the founders progressively moved into the background, although few expected AOL to emerge as the buyer at a time when its parent, Time Warner, is engaged in tentative talks with Yahoo! about merging their internet divisions.

AOL refused to discuss the Yahoo! situation yesterday, although Mr Falco said that the Bebo deal demonstrated Time Warner’s financial support for AOL, prompting Wall Street analysts to conclude that a combination of Yahoo! and AOL looked less likely.

The plan is to develop Bebo internationally, with new sites around Europe, while at the same time trying to promote Bebo using AOL’s AIM instant messenger and ICQ chat technologies. Time Warner also wants to boost AOL’s advertising revenues by building a cluster of leading websites, as part of its Platform-A initiative.

Balderton Capital, the venture capital group, made about $140 million from the Bebo sale – more than nine times its $15 million investment – in two years. Barry Maloney, a Balderton partner, was persuaded into making the investment when he saw his children spending all their free time on the network. He said: “Our expectations have been exceeded.”

— Yahoo! is to move its European headquarters from London to Geneva to benefit from a special Swiss tax break. The move means that 5 per cent of its European workforce will go to Switzerland. The California-based company refused to reveal how many people it employed in Europe or whether the move will involve any job losses.

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