Yahoo's Small Business division will be included in the company's plans to spin-off its stake in Alibaba Group.
The tech giant told employees last week of plans to separate the division from Yahoo, as reported by the Wall Street Journal.
Yahoo's Small Business unit provides SMBs help starting up and running their businesses online. Services offered include domain name registration, Web hosting, e-commerce, email setup and the availability of business advisors.
Last week, Yahoo announced a tax-free spin-off of its 15 percent stake in Chinese e-commerce giant Alibaba. A new, independent company -- dubbed SpinCo -- will own the Alibaba stake, which amounts to 384 million shares, currently valued at $40 billion. In a statement, Yahoo CEO Marissa Mayer said $50 billion will be generated for shareholders once the spin-off is complete.
The unit generates roughly $50 million in annual earnings before tax.
Amer Akhtar, Head of Yahoo Small Business said on the unit's Tumblr page on Tuesday:
"Yahoo Small Business will move over to the newly formed public company, along with Yahoo's approximately 384 million shares of Alibaba. With this new opportunity, we can invest even more in our platform and chart our own course.
We'll be investing in Yahoo Small Business infrastructure and operations, reflecting our ongoing commitment to your success."
Akhtar said Yahoo Small Business employees will be "invited" to join the new company, and the division will move over before the completion of the stake transaction in Q4 2015.
In Q4 2014, Yahoo reported earnings of $166 million, or 17 cents a share, on revenue of $1.18 billion.
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