SKAGEN Focus has been lifted by news that Comerica, our fourth largest holding, has received a $10.9 billion takeover offer from Fifth Third Bancorp, representing a 17% premium to its share price. Comerica’s shares climbed 14% in response to the announcement with the deal expected to complete by the end of the first quarter in 2026.
Dallas-based Comerica entered the SKAGEN Focus portfolio at the start of this year and was a 3.1% position in the fund at the time of the takeover offer. Our investment case focused on the lender’s unique potential to grow net interest margin in a lower interest rate environment and a misunderstood balance sheet which would have allowed for higher capital returns than anticipated by consensus. We also believed that its unusually low valuation made Comerica an attractive takeover target with consolidation among regional banks likely to increase under the new US administration.
The merger will create the ninth-largest bank in the US with around $288 billion in combined assets. It is expected to accelerate Fifth Third’s expansion across the fast-growing "Sunbelt" states that include Florida, Arizona and California. Analysts also highlight that the combined entity should achieve a more balanced funding mix, diversified revenue profile and scale benefits in commercial payments, wealth and asset management.
Rising Deals
The Fifth Third-Comerica deal is the largest in US banking this year after PNC struck a $4.1 billion agreement to buy FirstBank and Columbia Banking System acquired Pacific Premier for $2 billion earlier in 2025. It could accelerate a wave of consolidation under the Trump administration’s deregulation drive with lenders expected to seek scale to help mitigate the rising costs of technology and regulatory compliance.
Consolidation generally is on the rise this year. Global M&A activity reached $2.6 trillion in the first seven months of 2025 according to Dealogic data, up 28% on the previous year and its highest level since the 2021 pandemic-era peak. Deal-making has been boosted by a combination of regulatory changes and a quest for AI-led growth, while falling interest rates and the re-emergence of private equity have also spurred activity.
Another key factor is valuations, particularly in Europe, where share prices frequently fail to reflect fundamental strategic value. Our private equity-based approach to valuation and search for hidden assets on company balance sheets mean that we are implicitly drawn to potential takeover candidates. Pricing anomalies also mean that we are often followed into new positions by activist investors which can help to accelerate shareholder value creation. Earlier this year, for example, private equity firm Triton took a 5% position in our Germany-listed steel waste recycler, Befesa, while activist Life Asset Management recently revealed a stake in South Korean conglomerate KCC, a relatively new position in our fund.
We are confident that our price-driven approach means that our portfolio will see further M&A activity in the months ahead. The Comerica deal represents a significant boost to SKAGEN Focus, which has had a strong 2025 and is currently around 2% ahead of the MSCI All Country World Index and over 3% ahead of the MSCI ACWI Small and Mid-Cap Index[1]. You can read more about the latest performance drivers and portfolio activity in the fund’s third quarter report.
[1] As at 06/10/2025 net of fees.