Umanis: From a 7 PER Bargain to a €17.15 Takeover Bid

Umanis: From a 7 PER bargain to a €17.15 takeover bid

What happens when a company trades at a 7 PER, with a 25% ROIC and 45% ROE, and six years later someone puts €17.15 per share on the table? It means those who bought at €5 do the math and smile. Umanis, the French technology services firm specializing in AI and big data, went from being presented in the forum as one of Europe's cheapest stocks to leading a corporate deal that caught many off guard. The discussion started with a data point that seemed too good to be true: fabulous ratios, 2.7 leverage, and 15% annual growth sustained for over fifteen years.

What Umanis is and why it traded so cheaply

The starting point was a company with sales growing from €50 million to €160 million in six years, founders controlling 66% of capital, and an aggressive buyback policy: 40% of shares repurchased in that same period. This was complemented by 5%-10% organic growth and acquisitions at attractive prices, with debt of just 0.5 times EBITDA. The numbers invited thinking about obvious undervaluation.

The thesis was not original. One of the most trinc Spanish fund managers at the time, Alejandro Estebaranz of True Value, had focused on it, according to forum messages. The underlying argument: digitalization, big data, and AI as sector tailwinds, with expected 10%-15% annual sector growth. Those who bought with this in mind did not get the direction wrong, although the road had curves.

The €400 million plan and 10% margin

In April 2019, the company approved its 2018 accounts and presented a strategic plan with a 2022 horizon: reaching €400 million in revenue with an operating margin close to 10%. The operating margin profitability for 2018 stood at 9.3%. International expansion was supported by sustained inorganic growth, with acquisitions like Contacts Consulting, Océane Consulting Nord, Neonn, and Ebiznext consolidating in various tranches in 2019.

The first half of 2020 results, in the midst of the pandemic shock, showed revenue of €111.9 million, 4% more than the previous year. The first quarter grew 10%; the second fell 2%. It held the line. The company continued hiring — 670 new employees in 2021 — and continued buying companies. The growth narrative did not break.

The eternal dilemma: hold or sell

This is where things get interesting. Those who bought at €5 saw the stock rise 120% and had to decide. Some sold for liquidity and rotated to other values. Others held, convinced that the fair value was €20 per P/FCF. The stock passed through €6.3, €10, €14, €15.45. Eight consecutive weeks of gains. With no relevant news to justify the movement, beyond the mechanics of a low-liquidity value where any large block moves the price.

Those who sold at €10 doubled their money and moved on. Those who held until the end found a takeover bid at €17.15. The difference between one decision and another is the difference between a good year and a jackpot. And no one had a crystal ball, as repeated in the discussion itself.

The takeover: the ending no one wrote, but that arrived

The deal was announced at €17.15 per share. For those who had held since €5, a 240% return. For those who bought at intermediate highs, a relief. For those who sold at €10, a lesson on the cost of opportunity. The news, published in French financial media, closed the circle of a thesis that had started with a 7 PER and ended with an exclusion premium.

The question remaining in the air is not whether Umanis was a good company. It was profitable, growing, with controlled debt and aligned founders. The question is how many of those who defended it vehemently held until the end. Because the market, which sometimes punishes without reason, also sometimes rewards without warning.

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Key data of the Umanis case

• PER below 7 at the time of the initial thesis
• 25% ROIC and 45% ROE
• Financial leverage of 2.7
• Sales: from €50 million to €160 million in six years
• 40% share buyback in six years
• Founders with 66% of capital
• Debt of 0.5 times EBITDA
• 2018 operating margin: 9.3%
• 2022 target: €400 million in revenue and 10% margin
• First half 2020 revenue: €111.9 million (+4%)
• Final takeover bid: €17.15 per share