• PaidContent.org, Thursday, May 1, 2008 11 AM

New details have surfaced regarding the nature of the bizarre lawsuit that eBay lodged at Craigslist, a company in which it owns a 28.4% stake. The allegation was that Craigslist's board had made a move to dilute the online auctioneer's stake, but it turns out that Criaglist wanted eBay to divest itself from the company altogether. According to the suit, Craigslist CEO Jim Buckmaster was never comfortable with eBay owning a piece of the company, which it considers a competitor. As such, Buckmaster told then-eBay CEO Meg Whitman that Craiglist would "wish to explore options for our repurchase, or for otherwise finding a new home for these shares." Whitman responded to Buckmaster's concern with an offer to buy the online classifieds giant.

After Craigslist tried to adopt a poison pill to fend off a hostile takeover, eBay sued the company, claiming that the poison pill was a deliberate attempt to dilute the company's shares so that Craigslist might reclaim the stake at below market price. Meanwhile, Craigslist contends that eBay's classifieds site Kijiji is a competitor that nullifies some of its shareholder rights. According to the suit, Craigslist also tried to induce eBay to enter a new "right of first refusal" agreement, but nothing came of it.

Meanwhile, Craigslist's stance on the suit is as follows: "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," the company wrote on its blog.

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