Details of eBay's Complaint
According to the complaint, in early 2005, eBay launched Kijiji, an online classifieds Web site, in certain non-English-speaking countries. EBay later launched the Web site in the U.S. on June 29, 2007. On the same day, Buckmaster sent a letter to eBay saying that it had engaged in competitive activity by launching Kijiji in the U.S., the lawsuit states.
On July 12, Buckmaster sent a letter to Meg Whitman, then eBay's president and CEO, saying he had "negative feelings" toward eBay's launch of Kijiji in certain markets in the U.S.
"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," Buckmaster said in the letter.
In her response, Whitman said eBay had taken steps to "completely firewall off the operations relating to our Kijiji offering" from the corporate management of its equity investment in Craigslist. Whitman also offered to acquire the piece of Craigslist that eBay did not already own. Ebay said it had no interest in liquidating its holdings in Craigslist, especially given Craigslist's long-term revenue potential.
In the lawsuit, eBay said that on Oct. 15, 2007, and Oct. 25, 2007, Newmark and Buckmaster met as a board with its outside attorneys, without notifying eBay. Additionally, the two again met as a board with the attorneys in December 2007 and in January without notifying eBay and approved a series of "self-interested, self-dealing transactions detrimental to eBay's interests as a minority stockholder in Craigslist."
According to eBay, Buckmaster and Newmark took steps to limit eBay's ability to sell its stake in the company, which diluted its shares to 24.85% of Craigslist's outstanding shares, less than the 25% necessary to allow eBay to elect a director to Craigslist's board.
EBay is asking the court to rescind the various transactions undertaken by Newmark and Buckmaster that resulted in the dilution of its stake in Craigslist.
For more enterprise computing news, visit Computerworld. Story copyright © 2007 Computerworld Inc. All rights reserved.
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