By Greg Bensinger
Before splitting in two, online marketplace eBay Inc. is selling
off some old inventory.
EBay, which plans to spin off its PayPal payments unit next
quarter, said on Friday it had sold to Craigslist Inc. for an
undisclosed amount a 28.4% stake it had held in the online
classified-ad site since 2004 and settled outstanding
litigation.
The deal ends an occasionally contentious relationship between
the two Web firms. In 2008, eBay sued Craigslist, alleging the San
Francisco-based company had diluted its stake using a poison-pill
plan, which cost eBay a board seat. Craigslist charged eBay had
used its board seat to glean confidential information about its
business, pointing to the firm's launch of competing classified-ad
site Kijiji, which is now called eBay Classifieds in the U.S.
A Delaware Court of Chancery judge later ordered eBay's stake
restored, though eBay didn't regain its board seat. In documents
released during the dispute, Meg Whitman, then eBay's chief
executive, had expressed a desire to buy all of Craigslist.
Terms of the deal weren't disclosed, and representatives for
eBay and Craigslist declined to comment.
"EBay is now cleaning up, trying to stay focused on with their
core business," said Gil Luria, a Wedbush Securities Inc. equity
analyst. The sale is "unlikely to be material to eBay," he
said.
Craigslist, with its free online merchandise listings, was once
among the marquee e-commerce brands, but has been slow to keep pace
with rivals such as eBay and Amazon.com Inc., particularly with the
rise of smartphones. Though the company's site remains essential
for apartment hunters, it has failed to meaningfully update its
website and generally doesn't profit from the transactions it helps
facilitate. Craig Newmark, who founded Craigslist in 1995,
originally intended the site to be a non-profit, and he only
implemented fees after watching others profit from the first tech
boom. Mr. Newmark now oversees the CraigConnects philanthropic
organization.
Craigslist once logged big sales from listing fees for an "Adult
Services" section--shuttered in 2010--which attracted a mix of
prostitutes, escorts and private masseuses. Today, the company
charges for job listings, apartment-rental offerings and automobile
ads in certain cities. Sales last year were estimated to be $335
million, double the year before, according to AIM Group, a
classified advertising consultancy.
"There's probably a realization that Craigslist is never going
to be what eBay wanted it to be 10 years ago," said Mr. Luria.
San Jose, Calif.-based eBay said that deal also resolves any
outstanding litigation between the two companies.
"Love all, trust a few, do wrong to none," wrote Craigslist CEO
Jim Buckmaster in a blog post on Friday, borrowing from William
Shakespeare's comedy "All's Well That Ends Well."
Beyond selling its Craigslist stake, eBay is seeking to unload
its eBay Enterprise unit, which helps other companies with their
online sales efforts. It bought the division, then known as GSI
Commerce for around $2.4 billion in 2011. It also expects to spin
off its PayPal payments unit as a publicly traded company sometime
in this year's third quarter, creating a stand-alone marketplace
business.
Write to Greg Bensinger at greg.bensinger@wsj.com
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