The company has said it will work to find bidders for the business and expects to complete its "strategic evaluation" by the end of May.
Employees were told that Bebo was a declining business which required significant investment to compete in the social networking space, and AOL was not in a position to fund and support it.
"It is clear that social networking is a space with heavy competition, and where scale defines success," the company noted.
AOL made cutbacks at Bebo last November, when it entered into a consultation with Bebo's 20 UK staff after announcing around 100 employees from Bebo's global oprations would leave.
According to figures from ComScore, Bebo's global unique visitors in February totalled 12.8 million, which was down 45% on February 2009.
Facebook had 462 million visitors, MySpace nearly 110 million, and Twitter 69.5 million.
At the time of the acquisition Bebo was a significant force in the UK with 11 million users. It was founded in the UK by husband and wife team Michael and Xochi Birch.
Last year, AOL announced it would reduce its workforce across the globe by a third, cutting 2,500 jobs in order to reduce costs by $200m. While approximately 1,100 employees opted to join the voluntary redundancy programme, the company did not reach its target figure and has been in the process of laying off about 1,200 staff through compulsory redundancy.
.jpg)
.jpg)