Sales Web site eBay Inc. wanted to acquire Craigslist Inc. when it bought a minority stake in the classified-advertising Web site in 2004, former eBay Chief Executive Officer Meg Whitman told a judge.
Whitman said today the online auctioneer was "looking for new areas of growth" when it got the opportunity to buy a 28 percent stake in Craigslist. She testified at the start of a trial in Delaware state court of eBay's lawsuit claiming Craigslist officials changed their company's stock structure to unfairly reduce the value of eBay's stake.
"We were very interested in making an acquisition of Craigslist," Whitman, who is running as a Republican for governor of California after stepping down as eBay's CEO last year, told Delaware Chancery Court Judge William B. Chandler III. "We would have loved to buy the whole thing."
eBay wants Chandler to find that Craigslist founder Craig Newmark and CEO Jim Buckmaster violated Delaware corporate law by issuing shares to themselves to dilute eBay's stake and caused as much as $110 million in losses tied to the investment.
eBay contends the move allowed the pair to unfairly strip its seat on Craigslist's board. eBay runs the world's most-visited e-commerce site.
Craigslist officials counter that the changes were designed to beef up the closely held company's anti-takeover defenses. They allege Whitman and other eBay officials repeatedly offered to buy Craigslist, which is the most-visited classifieds site.
Craigslist's lawyers contend that eBay executives used confidential data gleaned from their ties to Craigslist in 2007 to start the U.S. version of Kijiji.com, a competing online classified advertising site.
Whitman, 53, testified today that eBay paid $32 million for the Craigslist shares owned by a disgruntled investor and made it clear from the start of talks with Buckmaster and Newmark that it was interested in owning the entire firm.
eBay also was considering buying online classified-advertising businesses in Europe at the time, Whitman told the judge.
"I was very interested in the classified business," Whitman said.
The former eBay CEO said that Buckmaster and Newmark got $16 million out of the $32 million the online auctioneer paid to acquire its Craigslist stake. "I know they each ended up with $8 million," she testified today.
To keep their options open, Whitman said eBay officials refused to enter a non-compete agreement with Craigslist as part of the share purchase.
"We saw this as a pretty big opportunity for eBay," Whitman testified.
In return for the investment, eBay was given a seat on Craigslist's board, said Pierre Omidyar, eBay's chairman and founder. Omidyar served as eBay's representative on Craiglist's board for about nine months.
Omidyar testified Craigslist officials weren't interested in his input on how to increase their online business or improve their systems.
"I was never trusted, and my counsel was never sought," he told Chandler.
Craigslist officials allege that eBay executives used their seat on Craigslist's board to gather information about the online-classified site's "secret sauce," Michael Rhodes, one of eBay's lawyers, said.
Whitman explained that the phrase is used at eBay as "shorthand for the essential ingredients for success in a business."
