Bunge has worked hard to get its balance sheet in shape. Under Greg Heckman, who took over as CEO in 2019, the US grain trader has reduced debt, shed non-performing assets and improved profits and revenue.

Now she is ready to flaunt her beach body. It is purchase of rival Viterra for $18 billion, including debt. The cash and stock business will transform it into one of the world’s largest agricultural commodity trading houses. The pair’s combined sales of $140 billion in 2022 would put it in the same league as industry leaders Cargill and Archer Daniels Midland.

It is difficult to fault the strategic logic of Viterra’s purchase. Assets are added. Bunge is the world’s largest oilseed processor. Viterra is a major buyer and exporter of grain. Joining forces brings vertical integration and lots of cost savings. Both groups are benefiting from the renewable diesel boom and the conflict-induced spike in oilseed and grain prices.

Bunge’s reasonable offer values ​​Viterra at 8.6 times enterprise value to EBITDA. That’s comparable to 6x for Bunge alone, but less than ADM’s 10x.

A 140 percent increase in its share price in three years gave Bunge a handy takeover currency. Viterra’s owners — Glencore, Canada Pension Plan Investment Board (CPPIB) and British Columbia Investment Management — will receive about 65.6 million shares of Bunge stock valued at about $6.2 billion and about $2 billion in cash. This would be covered by an estimated $250 million in cost savings three years after closing.

Bunge’s financial discipline means it should be able to take on Viterra’s $9.8 billion debt with little strain. The debt-to-ebitda ratio is expected to remain below 2x. S&P upgraded Bunge’s rating.

Regulators may prevent Bunge from showing off a ripped new figure. Could this agreement limit competition in the purchase of agricultural crops? Expect antitrust scrutiny from governments in the US, Brazil, Argentina and even China. Bunge might have to put his shirt back on.