Office Supply Chain Kravitz to Buy 50% Stake in Steimatzky

Kravitz and Arledan Investments, which controls Keter Publishing, would each take a 50% stake in Israel’s biggest bookseller.

Daniel Tchetchik

The Kravitz office supply and stationery chain is joining Keter Publishing in talks to buy the Steimatzky bookstore chain.

Kravitz and Arledan Investments, which controls the publishing company, would each take a 50% stake in Steimatzky, Israel’s biggest bookseller.

Steimatzky announced this week that its owner, Markstone Capital Group, had reached an agreement in principle to sell the chain to Arledan, subject to due diligence and antitrust approval.

The price is thought to be between 30 million shekels and 40 million shekels ($8.6 million-$11.5 million).

Kravitz has 75 stores in Israel. Late last year, the company began selling books, after Steimatzky began selling office supplies. The thinking in the industry is that the bookstores will expand their offerings to also include toys.

Blow to competition

A senior book executive said the proposed sale would only exacerbate the already very high concentration in the sector, particularly as Kravitz would no longer constitute to Steimatzky and Israel’s second biggest bookstore chain, Tzomet Sfarim. The two chains together have a 74% market share.

“Kravitz has 75 stores as well as Akademon [a college bookstore chain] and Steimatzky has more than 130 stores, and now they will be a united force, and the chance that a third strong competitor would come on the scene has been shelved,” the book executive said. He was speaking on condition of anonymity. Both will sell office supplies and it can be assumed that they will also both promote Keter book titles, he added.

Tzomet Sfarim has strengthened its market presence in recent years in a business with annual overall industry revenues of a billion shekels.

The chain has 87 locations and a 36% market share, compared to 42 stores and 14% market share in 2006.

According to the Czamanski Ben Shahar consulting firm, Steinmatzky’s market share during the same period increased from 36% to 38% despite reducing its number of stores from 150 to 134.

The combined market share of Israel’s independent booksellers is just 10% to 15%, down from 44% in 2006.

Tzomet Sfarim is owned by CEO Avi Shumer and book publishers Modan and Kinneret-Zmora-Bitan.

If the sale of Steimatzky to Keter and Kravitz does goes through, the chain can be expected to develop a much closer relationship with Keter, which is Israel’s third biggest publishing house, after Kinneret-Zmora Bitan and Yedioth Aharonoth Books.

That could put publishing companies without ownership connections to either Steimatzky or Tzomet Sfarim in an inferior position.

This, despite the introduction in February of a new law that prohibits booksellers from dedicating more than 45% of their preferred sales space to books released by publishers with which they are affiliated.