eBay’s stake in Craigslist restored following victorious court ruling

ebayThe world’s largest online auction website, eBay, just announced late this afternoon that a Delaware Court ruled in favor for the company in a lawsuit that involved the dilution of its investment in rival company Craigslist.

The lawsuit was initiated in 2008, and alleged majority Craigslist stockholders, and the company founders Mr. Buckmaster and Mr. Newmark, unlawfully undertook transactions that unfairly diluted eBay’s minority share in Cragslist.

eBay Inc. made an initial investment in the classifieds giant in August of 2004, although the terms of the deal were not disclosed, other than the fact that eBay earned a marginal 25-percent stake in the company after buying out the shares of an exiting executive.

eBay says the ruling today restores the firms investment in Craigslist and preserves value to eBay shareholders.

eBay now currently holds a non-controlling 28.4-percent total stake in the company.

eBay recently launched its own classifieds website called Kijiji that is targeted to North American users, allowing people to easily post and reply to local classifieds free of charge.

The company even more recently added additional features to Kijiji such as the ability to more prominently display classifieds for a price.

Online classifieds websites have received criticism more recently by politicians who allege the websites don’t do enough to hedge prostitution and to protect the safety of their users.

Faced with intensifying pressure from U.S. lawmakers, Craigslist only weeks ago decided to remove the “Censored Adult” section from its website, although that section is still present on the company’s Canadian website.

eBay recently updated earnings projections for fiscal 2010, saying the company expected to earn profits between $8.8-billion to $9.1-billion. The revised earnings projections were below market expectations.

The eBay stock (NASDAQ:EBAY) closed just over 1-percent below its opening stock price to close at $24.30 per share in today’s trading session.


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Peggy holds a Bachelor Arts degree with honors in Economics from York University in Toronto, Canada. She is a Certified Management Accountant (CMA). She has also passed Level I of the Chartered Financial Analyst (CFA) Program. She is also a realtor. Write to peggy@business2press.com
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