Craigslist fires back at eBay over 'share dilution' row

LONDON - US classified site Craigslist has fired a broadside at minority shareholder eBay, claiming that the auction site is making unethical assertions and possibly preparing for a hostile takeover.

The classified site's retort comes after eBay yesterday issued legal proceedings against Craigslist, claiming that Craigslist had diluted eBay's 28.4% stake by more than 10%.

claims that, in January, board, including founder Craig Newmark and chief executive Jim Buckmaster, unilaterally acted to dilute eBay's economic interest in Craigslist by more than 10%. However, eBay has given little more detail because the auction site submitted its lawsuit under seal.

In an entry posted on Craigslist's blog last night called , the firm asserted that eBay's accusations were unfounded and insisted the lawsuit came as a complete surprise.

"Coming from a company that views Craigslist as a prime competitor, filing suit without so much as mentioning these assertions to us beforehand seems unethical and suggests ulterior motives."

The post goes onto to say that eBay has no reason to feel threatened, "unless a hostile takeover of Craigslist, or the sale of eBay's stake in Craigslist to an unfriendly party is their ultimate goal".

In a statement, Michael Jacobson, eBay senior vice-president, said: "Since negotiating our investment with Craigslist's board in 2004, we have acted openly and in good faith as a minority shareholder, so we were surprised by these recent unilateral actions.

"We are asking the Delaware court to rescind these recent actions in order to protect eBay's stockholders and preserve our investment."

EBay's stake in Craigslist was sold in 2004 by a former unnamed shareholder. The financial terms of the deal were never disclosed.

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