eBay sues craigslist; cites dilution

EBay said Tuesday that it is suing craigslist, Craig Newmark and Jim Buckmaster to "safeguard its four-year financial investment."

The auction giant bought a 28.4 percent stake in craigslist in 2004, but alleges that in January that Newmark and Buckmaster "adopted measures that, among other things, unfairly diluted eBay's economic interest in craigslist by more than 10 percent." I have emailed craigslist to find out what exactly Newmark and Buckmaster did. My guess: craigslist issued more shares to dilute eBay's stake.

eBay's Kijiji already competes with craigslist. In a statement, eBay said (Techmeme):

By taking these unilateral actions, eBay believes that Newmark and Buckmaster breached their fiduciary duties in violation of Delaware corporate law.

Unfortunately, the complaint is sealed due to confidentiality restrictions.