Exclusive-Activist HoldCo owns Eastern Bankshares stake, pushes for sale, sources say

By Svea Herbst-Bayliss BOSTON (Reuters) -Activist investor HoldCo Asset Management has built a sizable position in Eastern Bankshares and wants the storied Boston financial institution to put itself up for sale, instead of buying up other banks, according to people familiar with the matter and documents seen by Reuters. HoldCo, which built its 3% stake in Eastern in recent months, is pressing for a sale, possibly to its much larger neighbor northeast super-regional M&T Bank. It also wants Eastern's management to stop its "poor allocation of capital," which includes three acquisitions made in five years and multiple securities restructurings, said the people who are familiar with HoldCo's thinking but can't discuss it publicly. The acquisitions ate up nearly all of the excess capital that Eastern received when it transformed from a mutual bank, founded in 1818, to a publicly traded company in 2020 when it raised $1.8 billion through its initial public offering, HoldCo argues. HoldCo blames Eastern's former chief executive and board chairman, Robert Rivers, and directors for mismanagement, arguing they have little expertise in buying banks but acquired three companies in four years the people said. The bank's stock rose to $18.17 a share on Friday, up 5.52%, on Reuters' report of HoldCo's stake, while the broader KBW Bank Index rose by less than 1% for the day. A representative for Eastern and for Rivers did not respond to requests for comment. The Fort Lauderdale, Florida-headquartered hedge fund, which oversees some $2.6 billion in assets and invests primarily in financial institutions, is ready to talk to Eastern's management but is also poised to ratchet up pressure and possibly launch a proxy fight to throw out directors, the people said. Eastern, which has a market value of $3.8 billion, currently has 15 directors and five, including Rivers who was elevated to executive chairman last year, will stand for election in 2026. "Nothing would please us more than a consensual resolution, but a proxy contest and any and all other options are on the table," the firm's founders Vik Ghei and Misha Zaitzeff said in documents seen by Reuters. Zaitzeff has already served on the board of another Boston-based bank, Berkshire Hills Bancorp, as part of a 2021 settlement between the hedge fund and bank. PUSHING FOR SALE  HoldCo is taking aim at Eastern two weeks after playing a role in an $11 billion deal where Fifth Third will buy Comerica. For months, the hedge fund had pushed Comerica to sell itself and in September turned up the heat by threatening to nominate five directors to its board. Bank mergers and acquisitions, while notoriously tough because of regulatory requirements, are expected to pick up now, analysts said, noting the Trump administration is expected to be more lenient than the Biden administration in approving possible deals. Eastern is Boston's leading local bank with more than 100 branches in Massachusetts, New Hampshire, Rhode Island and Connecticut and what analysts call loyal small business and retail customers whose families have banked there for decades. It also has low deposit costs, making it a potentially attractive target for bigger banks to buy. While Eastern cites its acquisitions as strengths that helped assets swell to $30 billion next month from $12 billion in 2019 and strengthen its foothold in wealth management, HoldCo disagrees. The firm argues that recent purchases of Century Bancorp, Cambridge Bancorp and HarborOne Bank, which will be finalized next month, have hurt shareholders and that they would have been better off if management had done nothing. "Had Eastern refrained from M&A and Securities Restructurings, it would conservatively have $13.90 per share of excess capital today versus a stock price of $17," the document said, adding "meaning that paying a special dividend today would allow shareholders to basically own this bank for free."  While HoldCo criticizes Rivers for his actions, he wields great power in Boston. Boston Magazine ranked him as No. 7 on its Most Influential Bostonians 2025 list, ahead of Fidelity Investments' Abigail Johnson and New England Patriots President Jonathan Kraft. (Reporting by Svea Herbst-Bayliss; Editing by Lisa Shumaker and Dawn Kopecki)

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