Internet Auction Giant eBay filed a lawsuit last month against Craigslist, the online classified site which draws over 20 million unique visitors per month. When news of the lawsuit surfaced, details were unavailable as the lawsuit was not made public. A redacted version has just been released and is available HERE.
According to eBay, the reason behind filing the lawsuit is that Craigslist directors Craig Newmark and Jim Buckmaster (also CEO), have unfairly entered into transactions that diluted eBay’s economic interest in the company by more than 10 percent. EBay alleged that both the directors have breached their fiduciary duties.
EBay claims that its equity in Craigslist has been diluted from 28.4 % to 24.85 %. With less than 25% of the company, eBay can no longer place a director on the Craigslist board.
Five days after the lawsuit was filed, Craigslist (headquarters shown above) fired back at eBay, calling the lawsuit unethical and “smelling of a hostile takeover”. Even in the lawsuit, eBay makes it clear that it would welcome the opportunity to purchase all of Craiglist.
Through its acquisitions, eBay has illustrated that it wants to be in the online classified business in a big way. Last year Kijiji (created and launched by eBay in 2005) was made available in select US cities.
Will David triumph over Goliath or will Goliath end up owning David?
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