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One can only imagine the brainstorm session
that resulted in its decision to spin off Yahoo
Small Business ( http://yahoosmallbusiness.tumblr.com/post/109624934574/yahoo-small-business-update ) along with the company’s minority
stake in Alibaba: “Guys, we need to
find an inconsequential yet functioning small
business for tax reasons: Any ideas?”

Yahoo had already announced ( https://investor.yahoo.net/releasedetail.cfm?ReleaseID=893147 ) that it would include a
“legacy, ancillary” unit in its Alibaba spin-off,
provisionally named “SpinCo.” In order to reap
the tax savings that were the entire reason for
spin-off deal ( http://www.bloombergview.com/
articles/2015-01-28/yahoo-would-rather-not-pay-taxes-on-its-alibaba-shares ) , SpinCo had
to include an “active trade business,” not just
$40 billion worth of Alibaba shares, and in the
words of the Wall Street Journal, Yahoo Small
Business drew the short straw ( http://blogs.wsj.com/digits/2015/02/03/yahoos-small-business-unit-draws-short-straw-in-alibaba-deal/ ) (paywall).

The unit, which helps small businesses set up
their websites, has about 100 employees and
brings in roughly $50 million in annual earnings
before interest, taxes, depreciation, and
amortization. The unit’s boss, Amer Akhtar, said
the move will provide an opportunity “to invest
even more in our platform and chart our own
course.”

Choosing to make Yahoo Small Business part of
SpinCo, although it seems a bit arbitrary, could
actually make sense if the company ever ends
up being purchased by Alibaba (though
executives at the Chinese e-commerce firm are
denying any interest in doing so ( http://qz.com/336311/alibaba-has-no-interest-in-buying-yahoos-spinco-stake/ ) ).

Alibaba inked a deal ( http://qz.com/337884/alibaba-is-helping-small-us-businesses-bypass-banks-to-buy-chinese-goods/ )
yesterday with peer-to-peer finance firm
Lending Club to set up financing for US small
businesses, and has a huge roster of small
business clients in China.

Author : Adam Pasick

Source: URL : http://qz.com/338559/yahoo-found-the-perfect-small-business-to-offload-on-its-alibaba-share-spin-off/

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