Question
In 2007, eBay started an online classifieds business called Kijiji, which was designed to compete with Craigslist, the most widely used online classifieds website in
In 2007, eBay started an online classifieds business called Kijiji, which was designed to compete with Craigslist, the most widely used online classifieds website in the United States.AtthetimethatitstartedKijiji,eBayowned 28.4%ofCraigslistandwasoneofonlythreestock-holders. As a result of choosing to compete with Craigslist and pursuanttotheCraigsliststockholders'agreement,eBay lost certain contractual consent rights and the right offirstrefusaloverthesharesitowned.TheothertwostockholdersaskedeBaytosellsitssharesbacktothecompany or to a third party, but eBay refused. The two stockholders responded, in their capacity as directors, by (1) adopting a plan that restricted eBay from purchasing additionalCraigslistsharesandhamperedeBay'sabilityto sell its shares to third parties, (2) implementing a staggered board to make it impossible for eBay to unilaterally elect a director to the Craigslist board, and (3) seeking to obtain a right of first refusal in Craigslist's favor over the shares eBay owned through a scheme that reduced eBay's ownership in Craigslist from 28.4% to 24.9%. eBay sued, asserting that the othertwostockholdershadbreachedthe fiduciary duties they owed eBay as a minority stock-holder. What was the result?
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