Israeli Bookstore Chain Steimatzky Sold to Investor Group Headed by Gimel Yafit

But the bookstore chain still owes employees and suppliers tens of millions of shekels.

Ofer Vaknin

An investor group headed by television pitchwoman Yafit Greenberg, better known as Gimel Yafit, has agreed to purchase Steimatzky from Markstone Capital.

The sale was signed late Tuesday, after prospective buyers Kravitz, a stationery and office supplies chain of stores and Arledan Investments, owner of Keter Publishing House, backed out of a deal to acquire the financially troubled bookstore chain.

Under the new agreement, Greenberg’s G Group will own 54% of Steimatzky. Her partners in the venture include the Korim publishing house, which is controlled by Avner Fahima. But some industry figures have expressed doubts about the deal going through, noting its complexity and the fact that Greenberg has in the past announced other acquisitions, notably Israel’s Channel 10 television, only for the deals to fall through.

Steimatzky CEO Iris Barel will presumably remain at the helm of the chain, one of two that dominate book retailing in Israel, at least for the time being. She is to receive a portion — perhaps half, sources say — of a $2 million bonus promised in a 2006 contract with Markstone. Barel came in for heavy criticism last week for taking a 2013 performance bonus of 650,000 shekels ($188,000), but under the new owners she is expected to have a much smaller compensation package.

Yedioth Books and game manufacturer Yetzira had also teamed up in a bid to buy Steimatzky, but they dropped out after Antitrust Commissioner David Gilo indicated that approval of the bookstore chain’s sale to a major book publisher was unlikely. Markstone’s agreement to assume Steimatzky’s debts to Deutsche Bank and the Magnolia jewelry retailer presumably paved the way to the sale.

The first indication of financial trouble at Steimatzky came in April, when it delayed payments to suppliers by 10 days. And earlier this month, the company told suppliers they would only receive half of what they were owed on June 20. As a result of its failure to pay suppliers on time, a number of publishers, particularly Yedioth Books, has withheld deliveries of its books to the stores. Steimatzky owes an estimated 18 million shekels to employees, and layoffs are expected. Barel has said the chain intends to close unprofitable stores.

Barel admitted to TheMarker that the company’s situation became “catastrophic” in late March. Book sales declined in the first quarter, at least in part due to the introduction in February of the Book Law, which prohibits most discounts on new books.

The question now is whether Steimatzky will meet its Friday deadline for paying some 12 million shekels it owes suppliers, which comes on top of 50 million to 60 million shekels still owed them. One knowledgable source said that suppliers should expect to write off a portion of the debt, on the understanding that Steimatzky’s collapse would destroy the entire industry. Steimatzky’s major competitor is Tzomet Sfarim, which is owned by CEO Avi Shumer and book publishers Modan and Kinneret-Zmora-Bitan.