When Yahoo spins off a holding company for its $40 billion investment in Alibaba, it will bundle in its Yahoo Small Business unit to keep the whole thing tax-free, The Wall Street Journal reported.
The spinoff plan was unveiled when Yahoo announced its Q4 earnings on Jan. 27. But at the time, Yahoo CFO Ken Goldman wouldn’t identify the “legacy, ancillary operating business” that had to be included to meet the tax-free requirements. Goldman would only say it was responsible for approximately $50 million of Yahoo’s pre-tax earnings.
But in a blog post on Friday (Jan. 30), Yahoo Small Business head Amer Akhtar said his unit was the one that would be spun off in the final quarter of 2015. “We remain 100 percent committed to providing the highest level of service possible to you, our loyal customers, whose businesses rely on our products and services. We’ll be investing in Yahoo Small Business infrastructure and operations, reflecting our ongoing commitment to your success.”
Yahoo Small Business offers domain names, website hosting and e-commerce tools, and has about 1.5 million customers and more than 100 employees, according to The Journal. The business unit has been operating in one form or another since 1998.
According to the company, Yahoo Small Business will continue to operate and sell the tools and services it offers, and current employees will be invited to join the spinoff. The unit is also “developing a plan for key investments into Yahoo Small Business’s infrastructure and organization,” Akhtar wrote, adding that “we’re mapping out additional investments now for our platform and services to ensure the highest level of support for our customers and our partners.”
That may be more than wishful thinking — at least for now — since the spinoff structure requires that an operating business be bundled in with the roughly 384 million Alibaba shares. Yahoo Small Business will move to the spinoff company before it’s officially separated from Yahoo later this year, according to Akhtar.