EBay Sells Craigslist Stake

Online marketplace eBay Inc. is about to split into two, but before doing so, it has decided to sell off some old inventory. On Friday, the company which plans to spin off its PayPal payments unit until the next quarter, stated that it had sold off about 28.4% stake in the online classified ad-site Craigslist for an undisclosed amount, which it had owned since 2004 and had also ended all outstanding litigation. This deal brings about the end of a relationship between the two firms that has been occasionally contentious. Craigslist had been sued by eBay in 2008 and the latter alleged that the ad-site had used a poison pill plan for diluting its stake.

This had resulted in eBay losing a seat on the Board. The San Francisco-based company had answered that eBay Inc. had misused its Board seat for gleaning confidential information about the business. Craigslist had pointed to the introduction of Kijiji, a classified ad-site that had been launched by eBay in direct competition to Craigslist. This website is now known as eBay Classifieds in the US. Later, restoration of eBay’s stock had been ordered by a Delaware Court of Chancery judge, but the company hadn’t been given its board seat again.

During the dispute, some documents had been released in which then chief executive officer of eBay, Meg Whitman had expressed the desire of purchasing all of Craigslist. Terms of this current sale of stake weren’t disclosed to the public and both Craigslist and eBay declined to comment on it. According to analysts, the sale isn’t likely to mean much to eBay as it would be more focused on cleaning up and focusing more on its core businesses. With its listings of free online merchandise, Craigslist had been regarded as one of the top marquee e-commerce brands once, but the rise of smartphones took a toll on it as well, along with so many others.

The firm has been slow in keeping up with rivals such as Amazon Inc. and eBay. While its website remains crucial for those hunting for apartments, Craigslist doesn’t offer anything meaningful to most customers and doesn’t get much profit from the transactions it helps in facilitating. Originally, Craigslist’s founder, Craig Newmark who had established the company in 1995 had wanted the company to be a non-profit and had only introduced fee when he had seen other reap the benefits of the technological boom. Now, Mr. Newmark serves as head of philanthropic organization called CraigConnects.

Big sales had been logged by Craigslist once from listing fees through an ‘Adult services’ section, which had been shut down in 2010. The section had attracted a mixture of escorts, prostitutes and private masseuses. Today, charges have to be paid for apartment-rental offerings, job listings and automobile ads in some cities. Last year, the sales had been approximately $335 million, twice a year earlier. San Jose, California-based eBay said that any outstanding litigation between the two companies has been resolved through this deal and it is also seeking to get rid of its eBay Enterprise Unit. 

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