Why did eBay sue Craigslist last week? Craiglist's fear of a hostile takeover played a role, the New York Times reports. The relationship between the classified ads site and minority shareholder eBay began to sour after eBay launched rival site Kijiji. Craigslist’s directors smelled a takeover in the offing and reorganized their stock to reduce the auction giant’s holding from 28.04% to 24.85%. EBay lost its right to elect a director—and sued.
The eBay complaint describes a July 2007 email from eBay’s then-CEO to one of Craigslist’s leaders, saying, “We would welcome the opportunity to acquire the remainder of Craiglist we do not already own whenever you and Craig feel it would be appropriate.” This apparently sparked the takeover fears and subsequent reorganization at the classifieds site.