Update 2: PaidContent reports confirmation:

Per Wednesday’s speculation, LA private equity firm Criterion Capital Partners has confirmed it’s buying social network Bebo from AOL.

Criterion isn’t disclosing any deal terms or price, which has been reported at $2.5 million by PEHub or $10 million by TechCrunch, two years after AOL bought Bebo for $850 million.

Update: VentureBeat adds to the discussion: "Sources close to the negotiations have told VentureBeat that AOL executives are livid that the news has broken and believe Criterion leaked the information. The sale has not yet closed." (emphasis added)

Original Article: Back in the Spring, it became evident that AOL was looking to unload Bebo, especially after its former president joined Facebook.

At that time, Jon Brod, Executive Vice President of AOL Ventures, wrote in an internal memo, "Bebo, unfortunately, is a business that has been declining and, as a result, would require significant investment in order to compete in the competitive social networking space.  AOL is not in a position at this time to further fund and support Bebo in pursuing a turnaround in social networking."

Brod was then quoted as saying, "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."

Now, in mid-June, it looks as though AOL has finally find a buyer for Bebo. Adam Ostrow at Mashable reports that the buyer is Criterion Capital Partners, a hedge fund. According to Michael Arrington at TechCrunch, the price will be "$10 million or less."

AOL bought for $850 million, so it seems like a fair enough deal.