425: REV Group Updates Merger Proxy Amid Shareholder Lawsuits

REV Group, Inc. has filed supplemental disclosures to its definitive proxy statement for the proposed merger with Terex Corporation, addressing shareholder lawsuits alleging material omissions.

Summary

• REV Group, Inc. (REV) filed a Form 425 to supplement its definitive joint proxy statement/prospectus related to the proposed merger with Terex Corporation (Terex).
• The supplement addresses three lawsuits filed by purported shareholders of REV and Terex, and demand letters, alleging the definitive proxy statement omits material information regarding the mergers.
• REV maintains the allegations are without merit and that the proxy statements comply with applicable law, but is providing supplemental disclosures voluntarily to mitigate litigation risks and potential delays.
• The supplemental disclosures will not alter the consideration for REV stockholders or the timing of the Special Meeting, scheduled for January 28, 2026.
• The REV Board of Directors continues to recommend that stockholders vote FOR the merger proposals.
• Supplemental information includes details on the background of the mergers, revised financial advisor opinions (Barclays for Terex, J.P. Morgan for REV), and updated unaudited prospective financial information for Terex.

Sentiment

Score: 6

Explanation: While the company is facing shareholder lawsuits alleging disclosure deficiencies, it is proactively addressing these concerns by providing supplemental information without admitting wrongdoing. The board's continued recommendation for the merger and the stated intent to not delay the Special Meeting suggest confidence in proceeding. However, the existence of litigation introduces uncertainty and potential costs.

Positives

• REV Group's Board of Directors continues to recommend voting FOR the merger proposals, indicating confidence in the transaction.
• The supplemental disclosures aim to mitigate risks of litigation delaying or adversely affecting the merger, suggesting proactive management of legal challenges.
• The merger is expected to realize synergies, with an estimated present value of approximately $595 million (representing net present value of run-rate synergies of approximately $75 million).

Negatives

• Three lawsuits have been filed by purported shareholders against REV, Terex, and their respective boards, alleging material omissions in the definitive proxy statement.
• Shareholder demand letters also allege disclosure deficiencies.
• The lawsuits seek significant remedies, including injunctions to delay or prevent the merger, rescission of the mergers, or damages.
• The company is incurring costs, risks, and uncertainties inherent in litigation related to the merger.

Risks

• The occurrence of any event, change, or other circumstance that could give rise to the right of one or both parties to terminate the definitive merger agreement.
• The possibility that the transaction does not close when expected or at all because required shareholder approvals and other conditions are not received or satisfied on a timely basis or at all.
• The risk that the benefits from the transaction may not be fully realized or may take longer to realize than expected due to general economic and market conditions, interest and exchange rates, monetary policy, trade policy, laws and regulations, and competition.
• Any failure to promptly and effectively integrate the businesses of REV and Terex.
• The possibility that the transaction may be more expensive to complete than anticipated due to unexpected factors or events.
• Reputational risk and potential adverse reactions of REV's or Terex's customers, employees, or other business partners resulting from the announcement, pendency, or completion of the transaction.
• Terex's issuance of additional shares of its capital stock in connection with the transaction.
• The risk that Terex's exploration of strategic options to exit its Aerials segment may not be successful or that any transaction entered into with respect to its Aerials segment is not on favorable terms.
• The diversion of management's attention and time to the transaction and the exploration of strategic options for the Terex Aerials segment, and from ongoing business operations and opportunities.
• The outcome of any legal proceedings that may be instituted against REV or Terex in connection with the transaction.

Future Outlook

The combined company anticipates realizing synergies, maintaining a low capital intensity, an attractive leverage position, an efficient cost base, and predictability of earnings and free cash flow. However, these forward-looking statements are subject to significant risks, including the successful integration of businesses, market conditions, and the outcome of legal proceedings.

Management Comments

• REV believes that the allegations in the Shareholder Letters and Actions are without merit, that each of the Preliminary Proxy Statement and the Definitive Proxy Statement complies with applicable law, and that no further disclosure is required.
• However, solely in order to mitigate any risk of the Shareholder Letters and Actions delaying or otherwise adversely affecting the consummation of the mergers and to minimize any costs, risks, and uncertainties inherent in any litigation related thereto, and without admitting any liability or wrongdoing, Terex and REV have determined to voluntarily supplement the Definitive Proxy Statement.
• The Board continues to recommend that you vote FOR each of the proposals to be voted on at the Special Meeting described in the Definitive Proxy Statement, including the proposal to adopt the Merger Agreement and approve the first merger.

Industry Context

The merger between REV Group and Terex Corporation, both operating in specialized vehicle and equipment manufacturing, reflects a potential consolidation trend or strategic alignment within the industrial and commercial vehicle sectors. Terex's planned divestiture of its Aerials business prior to the merger suggests a focus on core competencies or a streamlining of operations to enhance the strategic fit with REV. The valuation analyses by financial advisors, using comparable companies like Federal Signal, Alamo Group, Oshkosh, and Toro, indicate that both companies operate within a competitive landscape where enterprise value to EBITDA multiples are key valuation benchmarks. The pursuit of synergies highlights a common industry driver for mergers: achieving cost efficiencies and operational improvements.

Comparison to Industry Standards

• Barclays' analysis of Enterprise Value / 2026 EBITDA for Terex comparables ranged from 7.3x (Oshkosh Corporation) to 16.8x (Federal Signal Corporation), with a median of 9.4x. Terex's own projected 2026 EBITDA multiple was 8.4x.
• Barclays' analysis of Enterprise Value / 2026 EBITDA for REV comparables ranged from 8.7x (Alamo Group, Inc.) to 16.8x (Federal Signal Corporation), with a median of 10.8x. REV's own projected 2026 EBITDA multiple was 10.8x.
• J.P. Morgan's analysis of FV/2026E Adj. EBITDA Multiples for selected companies ranged from 6.1x (Hyster-Yale Materials Handling, Inc.) to 16.8x (Federal Signal Corporation).
• J.P. Morgan selected a FV/2026E Adj. EBITDA Multiple reference range for REV of 9.0x to 11.5x, and for Terex of 7.0x to 9.0x, based on professional judgment and industry experience.
• The implied perpetuity growth rates used in Barclays' DCF analysis for Terex (0.2% to 3.9%) and REV (2.0% to 5.1%) reflect different long-term growth expectations for each company within their respective segments.
• The discount rates used in DCF analyses (Barclays: Terex 10.5%-12.5%, REV 9.5%-11.5%; J.P. Morgan: REV 8.00%-10.00%, Terex 8.50%-10.50%) reflect the weighted average cost of capital and perceived risk profiles of the companies.

Corporate Governance

Legal Proceedings

• Two lawsuits filed by purported stockholders of REV against REV and its Board of Directors in the Supreme Court of the State of New York (Carter v. REV Group, Inc., et al., No. 650076/2026, and Stevens v. REV Group, Inc., et al., No. 650177/2026).
• An additional lawsuit filed by a purported stockholder of Terex against Terex, its Board of Directors, and REV in the Superior Court of the State of Connecticut (Garfield v. Cholmondeley, et al., No. FBT-CV26-6155173-S).
• These lawsuits generally allege that the Definitive Proxy Statement omits material information regarding the mergers.
• The lawsuits seek an injunction enjoining the Special Meeting and/or consummation of the mergers, rescission of the mergers or damages, and an award of costs, including reasonable attorneys' and experts' fees.
• Both Terex and REV have received demand letters from purported stockholders alleging disclosure deficiencies in the preliminary and/or definitive proxy statements.

Stakeholder Impact

• Shareholders (REV & Terex): Directly impacted by the merger terms, the outcome of the vote, and the potential for litigation to affect the transaction. REV stockholders are voting on the merger, and the supplemental disclosures aim to provide them with more information.
• Employees (REV & Terex): Potential impact from business integration, changes in management structure, and strategic shifts post-merger.
• Customers (REV & Terex): Potential impact from changes in product offerings, service, or brand strategy post-merger.
• Creditors (REV & Terex): Impacted by the combined entity's financial health, leverage position, and ability to service debt.

Next Steps

• REV stockholders will vote on the merger agreement and first merger at a Special Meeting held virtually on January 28, 2026.
• The companies will continue to address the legal proceedings initiated by purported shareholders.
• Terex will continue its exploration of strategic options to exit its Aerials segment.

Key Dates

Recommendation

The filing provides supplemental information regarding an ongoing merger, primarily to address shareholder lawsuits alleging disclosure deficiencies. While the company maintains the allegations are without merit and the board continues to recommend the merger, the existence of litigation introduces uncertainty and potential for delays or increased costs. The core financial terms and strategic rationale of the merger are not altered by this supplement. Investors should hold to await the outcome of the shareholder vote and the resolution of the legal challenges, as these factors will be critical in determining the merger's completion and the combined entity's future performance.

Keywords

REV Group, Terex Corporation, Merger Agreement, SEC Filing, Proxy Statement, Shareholder Lawsuits, Corporate Governance, Financial Analysis, Valuation, EBITDA, Discounted Cash Flow, Synergies, REVG, Merger Update