By Adam Tanner
In a lawsuit filed under seal in Delaware Chancery Court
last week, EBay alleged that Craigslist held "clandestine"
directors' meetings in recent months to dilute eBay's 28.4
percent stake to 24.85, or less than a quarter of the company.
A redacted version of the suit was released on Wednesday.
"We are no longer comfortable having eBay as a shareholder,
and wish to explore options for our repurchase, or for
otherwise finding a new home for these shares," Craigslist
Chief Executive Jim Buckmaster was quoted in the court papers
as telling eBay's then CEO Meg Whitman last summer.
Meg Whitman, then eBay's chief executive, responded via
e-mail last July with an offer to buy out Craigslist. "We would
welcome the opportunity to acquire the remainder of (the
company) we do not already own whenever you ... feel it would
be appropriate," she wrote to Craigslist CEO Jim Buckmaster.
The lawsuit cited industry commentators as saying
Craigslist could be worth several billion dollars. It ranked as
the world's third most valuable Web startup in a list released
by Silicon Alley Insider earlier this week: Valued at around $5
billion, Craigslist falls behind only Facebook and Wikipedia.
Reached by telephone late on Wednesday, Craigslist founder
Craig Newmark said he would not be interested in a sale, even
for billions of dollars. "Well, we have been saying
consistently we are not interested in selling," he said.
Newmark says providing a good community service rather than
earning a lot more money than a single individual needs is his
motivation in continuing his Craigslist work. He declined to
speak in detail about the lawsuit.
Craigslist operates with only a few dozen employees. Its
headquarters is located in a modest, century-old Victorian
house located in a residential neighborhood of San Francisco.
It relies on volunteers to run sites in 567 cities worldwide.
Newmark and Buckmaster have defied the conventional path
taken by virtually all successful Silicon Valley start-ups by
refusing to go on the stock market through an initial public
offering. At a 2006 UBS media conference, Buckmaster bewildered
Wall Street investors by saying Craigslist had no desire to
maximize sales by running simple text advertising on its site.
"Sadly, we have an uncomfortably conflicted shareholder in
our midst, one that is obsessed with dominating online
classifieds for the purpose of maximizing its own profits,"
Craigslist said in a statement on its website on Wednesday.
Both companies grew out of the ferment of new Web business
ideas that exploded in Silicon Valley in the mid-1990s.
But their stories diverge as eBay went on to dominate
online auction markets, becoming a multibillion company. By
contrast, Craigslist stayed true to its uncommercial ethic by
not charging for most of its local listings.
EBay bought a minority ownership stake in Craigslist nearly
four years ago as part of a strategy to buy up classified
advertising services both in the United States and Europe.
In 2005, eBay launched its own free online classifieds site
called Kijiji, first in several European and Asian markets, and
in 2007, it entered the United States. Kijiji operates in
hundreds of German cities and has spread to markets including
France, Italy, India, Taiwan and Canada.
They compete directly in the United States and a dozen
other countries, with Kijiji tailoring its ads to young
families in contrast to Craigslist's open flea-market style.
EBay's suit asserts that a move in January by Craigslist to
introduce a "poison pill" policy to fend off unwanted takeovers
was evidence that Craigslist is trying to drive eBay out.
(Editing by Eric Auchard)
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