Craigslist blanched as eBay eyed marriage: lawsuit

By Adam Tanner

SAN FRANCISCO (Reuters) - Web classifieds leader Craigslist sought a divorce, while online auction giant eBay proposed a formal marriage, according to court papers unsealed on Wednesday that detail a testy four-year relationship.

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.