HoldCo backs off Key, Eastern as banks refrain from bank acquisitions
Activist investor HoldCo Asset Management has decided to support KeyCorp CEO Gorman and will not pursue a proxy contest after the Cleveland company fully embraced a “no depository acquisitions” policy.
The activist investor also noted in a slide presentation that it will not pursue a similar challenge against Eastern Bankshares in Boston.
Key has recently vowed to ramp up share repurchases and made changes to its board of directors. Similarly, Eastern said in January that it would not pursue any acquisitions to focus on organic growth and returning capital to shareholders.
“Key had emphasized even before HoldCo began to push for change that it was not interested in depository M&A and that repurchase would be more aggressive,” Scott Siefers, a Piper Sandler analyst, wrote in a client note. “Thus, it is not fair to conclude that HoldCo’s push alone led to recent changes. Nonetheless … investors may conclude that the holder indeed affected some change at the company.”
Holdco’s disclosure “probably relieves some pressure and fears that there could be further unflattering releases in coming months,” Siefers added. “As such, as the market digests today’s announcement by the activist, we believe it will conclude that this brief activist chapter in Key has come to a close.”