Markstone Capital Partners Fund announced today that it had reached agreement to acquire full ownership of the Steimatzky bookstore chain from Ari Steimatzky. The parties did not disclose the acquisition price.
Markstone stressed that all 800 employees of the chain would keep their jobs. Ari Steimatzky will remain active chairman, and Yehoshua Matzliach will remain CEO.
Steimatzky has over 150 stores in Israel. In recent years, the chain has positioned itself as an all-around leisure center by expanding into computer games, movie videos and DVDs, and toys.
Industry sources believe that Ari Steimatzky, who is over 60, sold the family-owned chain because his children are not interested in working in it. He apparently concluded that it is better to sell the chain at an attractive price, while retaining his position in it for the coming years.
Steimatzky also owns 49% of Keter Publishing House (TASE: KETR), one of Israel’s largest publishers. Keter’s market cap is NIS 97 million, making the bookstore chain’s share worth almost NIS 50 million. Markstone has now entered both the retail book and publishing industries simultaneously.
Markstone, which claims to be the largest strategic investment fund of its kind operating in Israel, recently finished raising $800 million. The fund focuses on investments in companies with growth potential that lead in their fields, and helps develop and strengthen the companies in which it invests.
Markstone says that it spotted Steimatzky as a leading brand name, with dedicated management team and staff. Markstone adds that Steimatzky is a long-term investment. The fund plans to continue operating the company in its current format, and to invest in its growth, utilizing the current management and staff.
The Steimatzky chain, which recently celebrated its 80th birthday, expanded from a single small store in Jerusalem to a chain rated by Dun & Bradstreet Israel as one of Israel’s 250 leading companies.
Steimatzky holds an extremely dominant position in the Israeli bookselling market. Figures published by Business Data Israel before Israel Book Week in June 2005 showed that 69% of Israel’s chain bookstores were Steimatzky stores. Tzomet Sfarim, in which Modan Publishing House has a 30% stake, is far behind with 17.5%, followed by Academon 4.5%, Dyonon 3.5%, Tamir Books 3%, and Yudan Books 2.5%. The sector has an estimated annual turnover of NIS 1.8 billion, but its profit margins are thought to be low.
Markstone has offices in Israel and the US. Ron Lubash and Amir Kess jointly manage the fund in Israel, and Elliott Broidy is chairman of the fund in the US. Lubash managed the Israeli branch of Lehman Brothers for ten years, while Kess was VP of Arison Holdings.
Markstone’s investors include some of the world’s leading pension funds, such as New York State Common Retirement Fund (NYSCRF), California Employees’ Retirement System (CalPERS), and pension funds from New Mexico, Oregon, North Carolina, Bermuda, and leading Israeli investment institutions.
Published by Globes [online] - www.globes.co.il - on October 16, 2005