Our global small and mid-cap fund has received four takeover offers in recent months, none of them connected to the AI theme dominating market headlines.
Against a backdrop of record headline takeover activity, much of it driven by technology, SKAGEN Focus has received offers or proposals for four portfolio holdings in recent months. US homebuilder Beazer Homes, Italian bank Banca Monte dei Paschi di Siena (BMPS), UK-listed flow control specialist Vesuvius and Mexican logistics group Traxión have all attracted bids, with none of the four having any connection to AI.
M&A globally is booming in 2026. Deal values in the first nine months rose 27% year-on-year to hit USD 4.4 trillion according to ION Analytics, with technology the largest sector for the eleventh consecutive quarter at around USD 1.1 trillion. Transactions have been concentrated at the top of the market, however. A recent M&A report from BCG highlighted that activity in deals below USD 1 billion has yet to recover and remains depressed relative to historical norms.
Against this market context, four bids for unfashionable holdings in our small and mid-cap fund stand out. The situations share several features. Each company was out of favour when we invested, trading at a discount to book value or a low multiple of mid-term earnings, with the reasons for a depressed valuation – a weak housing market, legacy concerns at an Italian bank, a cyclical downturn in steel and worries about Mexico – widely known. Each holding also owned assets or market positions that would be costly and slow for a competitor to replicate. Admittedly, not all of these proposals have reached our estimated price target, and our initial inception price point in Traxion was much higher in 2024, but we had held the weighting of the shares into the weakness.
We value companies much as an industrial owner would, comparing the cost to buy a business off market with the cost to build it, and basing fair value on normalised or mid-term earnings power. Although we never base our investment case solely on a potential takeover, when a stock becomes too cheap relative to its earnings and asset backing, strategic buyers tend to emerge. Three of the four bids this year came from competitors or larger peers, which are typically best placed to value the assets and create synergies.
Beazer Homes
We initiated our position in Beazer Homes late 2024 when the US homebuilder traded at around 0.5x book value and 6x our estimate of mid-term earnings, despite a land bank of over 26,000 lots and a much-improved balance sheet. Sector consolidation was one of the catalysts we identified, with the shares cheap relative to peers. Following two unsuccessful approaches in May and June this year, Dream Finders Homes agreed terms with Beazer in August at USD 33.50 a share in cash, valuing the company at around USD 2.2 billion including debt. The final agreement was more than 80% above the share price before the first public proposal and we subsequently exited Beazer during the third quarter. The position was also held by our real estate fund SKAGEN m2.
Banca Monte dei Paschi di Siena
We bought into BMPS last year as we believed that the market underestimated the earnings power of a bank that had moved from a decade of restructuring to one of the best capitalised in Italy. Its acquisition of Mediobanca had distorted investor perception, while the shares traded below book value, offered a double-digit dividend yield and generated returns on equity of 10–11%. In June, larger peer Intesa Sanpaolo launched a cash and share offer valuing BMPS at around EUR 30.6 billion, or EUR 10.09 a share, representing a 12.5% premium. The shares subsequently rose to our price target and we exited the position in the second quarter.
Vesuvius
Vesuvius, the global leader in molten metal flow control for steelmakers and foundries, de-rated as weak macro conditions and soft steel and automotive markets weighed on the share price. We viewed the business as having a strong market position with an overlooked asset in its separately listed Indian operations. In September, Austria-based refractories group RHI Magnesita confirmed it was in talks over a possible cash and share offer worth 549p a share, representing a 47% premium. Activist Cevian Capital, the largest shareholder which holds around 23% of the company, has undertaken to support a recommended offer, although there is no certainty that a firm offer will be made. Vesuvius was a 1.4% position in SKAGEN Focus at the end of September.
Traxión
Traxión is Mexico's largest third-party road logistics operator and the clear leader in personnel transport, with a diversified blue-chip client base. We invested in 2024 believing that the market was not pricing even its current earnings power, let alone the growth potential from nearshoring and logistics outsourcing. In September, Pantera Holdings, a company linked to executive president and co-founder Aby Lijtszain, launched a tender offer at MXN 13.18 a share, a premium of around 21%. We believe the offer price remains well below the value of the business on mid-term earnings, although the founding family's interest underlines the value it sees in the company. Traxión was a 2.0% position in the fund at the end of September.
Beyond the headlines
With capital and attention concentrated in a narrow group of AI-related names, we continue to find small and mid-cap companies valued far below what a strategic buyer would pay for their assets and earnings power. Four bids in a few months is unusual but we believe it underlines the value hidden in SKAGEN Focus. With many cheap and ignored holdings, we believe the portfolio is well-positioned should M&A activity broaden down the market-cap spectrum and further strategic buyers emerge from the doldrums.
NB: All information as at 30/09/2026 unless stated.
FAQ
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A strategic buyer is a company that acquires another business for commercial reasons such as market share, capabilities or cost savings, as opposed to a financial buyer such as a private equity firm. Three of the four recent bids for SKAGEN Focus holdings came from competitors or larger peers.
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We invest in companies that are out of favour and trade at a significant discount to our estimate of fair value, often with tangible assets or market positions that would be costly to replicate. When a share price falls far enough below what the business is worth, buying it can become cheaper than building it, which is when strategic interest tends to emerge.
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No. Each investment case is based on the company's earnings power and asset value over a two- to three-year horizon. A takeover is one of several ways a valuation discount can close, alongside catalysts such as improving earnings, capital returns or a re-rating by the wider market.
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We assess each offer against our own estimate of fair value. In the recent cases, we exited Beazer Homes after Dream Finders Homes raised its offer, and sold BMPS once the shares reached our price target following Intesa Sanpaolo's bid. Where we believe an offer undervalues a company, we can keep the position.
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Four bids in a few months is unusual, and we do not expect activity at this pace every year. However, with M&A concentrated in large deals and the AI theme, we continue to find small and mid-cap companies trading well below what a strategic buyer would pay for their assets and earnings power.