Merchants who use Yahoo Stores to host their websites found out in January that the business unit that operates the platform would be spun off from its parent later this year. On Thursday, they learned that Yahoo Small Business (YSB) unit was being rebranded Luminate.
The head of the YSB, Amer Akhtar, said,”Luminate reflects how we illuminate the path forward for our customers and underlines our commitment to helping small businesses grow.”
The spinoff is part of Yahoo’s plan to unload its shares in Alibaba, and the move to include YSB along with the shares was originally designed to minimize the tax impact. But as we noted in February, it’s possible Yahoo may be relieved to be unloading what it considers to be a legacy unit.
The spinoff company, currently called Aabaco Small Business LLC, will become owned by Aabaco Holdings Inc. after the split, and its primary asset will be its shares in Alibaba.
Ventura Web Design is a long time service provider to Yahoo Store owners. Its CEO Kevin Richards said Yahoo Store owners are incredibly loyal to the platform. “Retailers have so many things to think about and do every single day, seven days a week, that when their ecommerce platform remains as stable as Yahoo has for so many years, they appreciate and recognize that.”
That said, Richards noted that merchants are definitely cautious about the upcoming changes and what it means for them. “The current plans for the creation of Aabaco, the parent company of Luminate, require the new entity to be fully separated from Yahoo in the 4th quarter of 2015. That worries merchants because no one wants to see anything go wrong during the busy shopping season, and that includes Luminate engineers.”
But he’s confident of a smooth transition. “Other platforms have had some serious outages, including during the busy Christmas season, and Yahoo has not seen that.”
Just as people have speculated eBay Marketplaces could be acquired after the split with PayPal, should merchants expect Aabaco to be acquired after the split with Yahoo?
The Wall Street Journal says that Yahoo is putting into place anti-takeover provisions that will make it difficult for another entity to snap up the company in the short term. It notes the opportunity for investors to try to hedge in the short term the differences in stock price between Aabaco and Alibaba shares.
“Opportunistic investors may use this formative stage to take advantage of short-term trading trends,” the Journal writes – “And Aabaco could have even more challenges than the standard spinoff because its primary asset will be a listed security that could be particularly attractive to try to monetize – 15% of Alibaba – with Aabaco likely selling at a discount. Still, trying to play that arbitrage may be easier said than done – an outright sale of the Alibaba shares could trigger a huge tax.”
We’re uncertain whether Aabaco could easily sell off the Luminate part of its business or not, however. Either way, merchants face uncertainty even as YSB has been putting a positive spin on the move. Some may feel they’re pawns in a game over which they have no control.
You can read Akhtar’s message to Yahoo Stores merchants on the Yahoo Small Business blog.
And Yahoo has set up a page on its website with FAQs. There, it states, “We are 100% committed to providing the highest level of service and solutions to help you grow your business. Plus, as a subsidiary of Aabaco after the spin-off, we’ll be investing in our infrastructure and operations to make your experience even better.”