EBay takes stake in Craigslist

Online auction giant takes 25 percent stake in classified ads site

SAN FRANCISCO - Online auction giant eBay Inc. has acquired a 25 percent stake in San Francisco classified advertisements Web site Craigslist, the companies said Friday.

The deal will allow eBay and Craigslist to share expertise and resources, the companies said. Terms of the deal were not disclosed.

Craigslist was founded in 1995 as a free classifieds Web site for the San Francisco area. The site now serves 45 cities worldwide including New York, Toronto and London and is still expanding. Craigslist includes listings for jobs, housing, personals and events.

"The deal we're announcing today basically allows us to operate without changing our mission of community service, while making available to us expertise and resources we could really use," Craigslist founder and chairman Craig Newmark wrote in a posting on his Web log, a personal Web site.

EBay confirmed that as a minority shareholder, it does not expect to get any control over Craigslist. "Craigslist will continue to run their business as they see fit, eBay is a minority shareholder," said eBay spokesman Hani Durzy.

EBay's primary reason to buy the stake is to learn more about the classifieds model that has been a great success for Craigslist, Durzy said. "There seems to be something really powerful about the classifieds model in certain areas. It is something that we're going to be able to explore as part of this acquisition," he said.

EBay purchased the shares from an individual Newmark worked with and had given part ownership to. When the unnamed man left the company and decided to sell his shares to eBay, Newmark and his associates met with eBay and came to an agreement.

"Although I never figured that part of Craigslist might be owned by a public company, Meg Whitman and Pierre Omidyar showed that they were interested in us for all the right reasons," Newmark wrote on his Web log. Whitman is president and chief executive officer of eBay, Omidyar is eBay's founder and chairman.

EBay does not expect the purchase of the Craigslist shares to impact its financial guidance for the third quarter of 2004, the San Jose, California-based company said. EBay in April reported first quarter net income of US$200.1 million on revenue of $756.2 million.

Copyright © 2004 IDG Communications, Inc.

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