DEFM14A: Terex and REV Group Announce Strategic Merger

Terex Corporation and REV Group, Inc. propose a strategic stock-and-cash merger, creating a diversified specialty equipment manufacturer with significant synergies.

Summary

• Terex Corporation and REV Group, Inc. have entered into a definitive Merger Agreement dated October 29, 2025, for a strategic combination of their businesses.
• REV Group, Inc. will merge into Terex Corporation through a two-step merger process.
• Holders of REV common stock will receive 0.9809 shares of Terex common stock and $8.71 in cash for each share of REV common stock.
• The implied value of the merger consideration for each REV common stock share was approximately $63.62 based on Terex's closing price of $55.98 on October 29, 2025, and $62.36 based on Terex's closing price of $54.69 on December 22, 2025.
• Following the completion of the mergers, current holders of REV common stock are estimated to own approximately 42% of the common stock of Terex, while current Terex common stock holders will own approximately 58%, both on a fully diluted basis.
• Both the Terex Board of Directors and the REV Board of Directors have unanimously approved the Merger Agreement and recommend that their respective stockholders vote in favor of the proposals.
• Special meetings for stockholders of both companies are scheduled virtually for January 28, 2026, at 10:00 a.m. Eastern time.
• The mergers are expected to close by the end of the first half of calendar year 2026.
• The transaction is expected to generate $75 million in annual run-rate synergies by 2028, with approximately 50% anticipated within twelve months of closing.
• The mergers are intended to qualify as a reorganization within the meaning of Section 368(a)(1)(A) of the U.S. Internal Revenue Code for federal income tax purposes.

Sentiment

Score: 8

Explanation: The filing presents a strong positive outlook for the strategic merger, emphasizing significant synergies, enhanced market position, and financial strength. Both boards and their financial advisors support the transaction, indicating a high degree of confidence in its value creation potential. While standard risks are acknowledged, the overall tone and detailed benefits suggest a highly favorable sentiment.

Positives

• The merger is expected to create a leading diversified specialty equipment manufacturer with mid to high teens margin profiles in attractive end markets characterized by low cyclicality and resilient demand.
• The combined company is projected to operate from a position of enhanced financial strength, featuring an attractive leverage position, low capital intensity, and significant free cash flow to fuel growth.
• REV's substantial backlog of approximately $4.2 billion is expected to support 2-2.5 years of specialty vehicle sales through 2028, providing forecast predictability.
• The transaction is anticipated to unlock significant value-creating synergies, with $75 million in annual run-rate synergies expected by 2028, and approximately 50% of these realized within 12 months of closing.
• Operational synergies are expected through product family grouping and standardization, digital MES implementation, advanced planning and scheduling, facility layout optimization, workforce training, and combined scale.
• Commercial synergies are expected from digital safety suite solutions, new product development adjacencies, combined customer relationships, remanufacturing capabilities, and enhanced aftermarket eCommerce tools.
• The continuity of leadership, with Simon Meester continuing as CEO of the Combined Company, is expected to enhance the likelihood of achieving strategic benefits.
• The REV businesses are expected to continue under their current leadership post-closing, minimizing operational disruption.
• Terex has a strong track record of successfully integrating acquisitions, exemplified by the ESG integration which is outperforming initial synergy targets by 125-150%.
• The mergers are intended to qualify as a tax-free reorganization for U.S. federal income tax purposes for REV stockholders receiving stock.
• There is no condition regarding financing for the completion of the mergers.

Negatives

• The issuance of approximately 48.4 million new shares of Terex common stock will dilute the ownership position of current Terex stockholders.
• The market value of the merger consideration for REV stockholders will fluctuate based on the market price of Terex common stock, as the exchange ratio is fixed.
• There is a risk that the anticipated benefits, including expected synergies and growth, may not be fully realized or may take longer to achieve than expected.
• Both Terex and REV will incur substantial non-recurring fees and costs associated with the mergers and integration, regardless of whether the mergers are completed.
• Uncertainties related to the mergers may lead to a loss of key management personnel and other employees, or make it difficult to attract and motivate them.
• Restrictions on business activities imposed by the Merger Agreement prior to closing could prevent both companies from pursuing attractive business opportunities.
• The announcement and pendency of the mergers could lead to negative reactions from financial markets, customers, dealers, suppliers, or employees.
• The completion of the mergers may trigger change-in-control or other provisions in existing agreements, potentially leading to terminations or renegotiations on less favorable terms.
• The unaudited pro forma combined financial statements and prospective financial information are based on preliminary estimates and assumptions, and actual results may differ materially.
• The fairness opinions from financial advisors do not reflect changes in circumstances between the signing of the Merger Agreement and the completion of the mergers.
• The maintenance of any share repurchase programs and the declaration, payment, and amounts of future dividends by the Combined Company will be uncertain and at the discretion of the new board.

Risks

• The mergers are subject to various conditions, including stockholder approvals and regulatory clearances, and may not be completed on a timely basis or at all.
• Failure to complete the mergers could adversely affect the ongoing businesses, financial conditions, financial results, and stock prices of both REV and Terex.
• Termination fees of $128 million are payable by either Terex or REV under specified circumstances if the Merger Agreement is terminated.
• Regulatory authorities may impose conditions, limitations, or divestitures in connection with their approval, which could have an adverse effect on the Combined Company or delay/prevent completion.
• The fixed exchange ratio means the value of the stock consideration received by REV stockholders will fluctuate with Terex's market price, potentially resulting in a lower value than anticipated.
• The market price of Terex common stock following the closing may be affected by factors different from those that historically affected Terex or REV individually.
• The mergers may be dilutive to Terex's earnings per share, which could negatively affect its market price.
• The opinions of financial advisors do not reflect changes in circumstances between the signing of the Merger Agreement and the completion of the mergers.
• Members of the REV and Terex Boards and management have interests in the mergers that may differ from, or be in addition to, those of other stockholders.
• Business relationships with customers, distributors, suppliers, and other partners may be disrupted due to uncertainty associated with the mergers.
• Uncertainties may cause a loss of management personnel and other key employees or make it difficult to attract and motivate them.
• Restrictions on business activities in the Merger Agreement could limit Terex's and REV's ability to pursue opportunities or make changes prior to closing.
• Lawsuits challenging the mergers have been filed, and an adverse ruling could prevent or delay the mergers.
• Completion of the mergers may trigger change-in-control or other provisions in existing agreements, potentially leading to adverse impacts.
• There is no assurance that the mergers will qualify as a tax-free reorganization for U.S. federal income tax purposes, despite the intent and legal opinions.
• The rights of REV stockholders will change as a result of becoming Terex stockholders, governed by different corporate documents.
• REV stockholders will have a significantly reduced ownership and voting interest in the Combined Company.
• Terex's current stockholders will also experience dilution due to the issuance of new shares.
• The Combined Company is expected to incur substantial expenses related to the completion and integration of the mergers, which may exceed anticipated savings.
• Terex may be unable to successfully divest its Aerials business on favorable terms or within the anticipated timeline, which could adversely affect its business and financial condition.
• The Combined Company's ability to effectively manage its expanded operations following the mergers is uncertain.

Future Outlook

The mergers are expected to close by the end of the first half of calendar year 2026, subject to stockholder and regulatory approvals. The Combined Company anticipates achieving $75 million in annual run-rate synergies by 2028, with approximately 50% realized within 12 months of closing. Terex also plans to initiate a strategic review process for its Aerials business, including a possible divestiture, with the goal of maximizing shareholder value.

Management Comments

• The Terex Board of Directors determined that the Merger Agreement and the transactions contemplated, including the issuance of Terex common stock, are fair to, and in the best interests of, Terex and its stockholders.
• The REV Board of Directors determined that the Merger Agreement and the transactions contemplated, including the mergers, are fair to, and in the best interests of, REV and its stockholders.
• Simon Meester, the current Chief Executive Officer of Terex, will continue in his current role with the Combined Company, ensuring leadership continuity.
• The REV businesses are expected to continue to be led by the same businesspeople as pre-Closing, anticipating minimal disruption to operations.

Industry Context

The proposed merger aligns with Terex's decade-long strategy of divesting more cyclical and higher capital intensity businesses while expanding into leading businesses with high-demand products and services. The combination with REV Group, a specialty vehicle manufacturer, will create a diversified industrial equipment company with exposure to essential public services (ambulances, fire apparatus), commercial infrastructure, and consumer leisure markets. These end markets are characterized by low cyclicality, resilient demand, and long-term growth profiles, enhancing the combined entity's overall market position and growth potential.

Comparison to Industry Standards

• Barclays Capital Inc., financial advisor to Terex, conducted a selected comparable company analysis for Terex using Federal Signal Corporation, Alamo Group, Inc., REV, Douglas Dynamics, Inc., Toro Corp., and Oshkosh Corporation.
• Barclays' analysis indicated that the proposed exchange ratio of 0.9809 was within the implied exchange ratio range of 0.6955 to 1.2837 based on 2026E EBITDA and 0.7525 to 1.4945 based on 2027E EBITDA.
• Barclays' discounted cash flow analysis for Terex resulted in an implied price per share range of $71 to $98, and for REV, $74 to $93.
• J.P. Morgan Securities LLC, financial advisor to REV, conducted a public trading multiples analysis for REV using Oshkosh Corporation, The Toro Company, Federal Signal Corporation, Alamo Group Inc., Douglas Dynamics, Inc., Thor Industries, Inc., and Winnebago Industries, Inc.
• J.P. Morgan's analysis derived implied share price ranges for REV common stock of $42.90 to $62.70 (FV/2025E Adj. EBITDA) and $51.00 to $65.50 (FV/2026E Adj. EBITDA), compared to the implied REV offer price of $64.54.
• J.P. Morgan's discounted cash flow analysis for REV indicated an implied per share equity value range of approximately $73.00 to $111.50, compared to the implied REV offer price of $64.54.
• J.P. Morgan's intrinsic value creation analysis suggested a hypothetical incremental implied value of 8.2% for REV stockholders from the mergers, taking into account estimated synergies.

Management Changes

Corporate Governance

Legal Proceedings

• As of December 22, 2025, REV and Terex have received letters from counsel representing purported stockholders of REV alleging that the registration statement on Form S-4 is materially misleading and/or omits purportedly material information, demanding corrective disclosures.
• REV and Terex believe such allegations are without merit and intend to defend against these lawsuits.

Stakeholder Impact

• **Shareholders (REV)**: Will receive a combination of cash and Terex common stock, allowing them to participate in the future value of the combined entity, but will experience diluted ownership and their rights will be governed by Terex's corporate documents. Appraisal rights are available for eligible stockholders.
• **Shareholders (Terex)**: Will experience dilution due to the issuance of new shares but are expected to benefit from the strategic advantages, diversification, and identified synergies of the combined company.
• **Employees (REV)**: Continuing employees will receive comparable annual base salary/hourly wage rates, short-term incentive opportunities, and employee benefits for a specified period post-closing. Equity awards will be converted to Terex awards, and executive severance agreements will be triggered upon qualifying terminations.
• **Customers, Suppliers, and Dealers**: Business relationships may face disruption due to the uncertainty of the merger, but the combined company aims to leverage respected brands and an expanded customer base to enhance support and growth opportunities.

Next Steps

• Terex stockholders will vote on the Terex stock issuance proposal and the Terex adjournment proposal at a virtual special meeting on January 28, 2026.
• REV stockholders will vote on the REV merger proposal, the REV advisory compensation proposal, and the REV adjournment proposal at a virtual special meeting on January 28, 2026.
• Terex will take all necessary actions to ensure the shares of Terex common stock issued in the merger are approved for listing on the NYSE, subject to official notice of issuance.
• Terex will file a Registration Statement on Form S-8 to cover the issuance of Tag Shares subject to the Tag Stock Awards.
• Terex will continue its strategic review process regarding its Aerials business, including a possible divestiture, with the goal of maximizing shareholder value.

Key Dates

Recommendation

The unanimous recommendation from both Terex and REV Boards, supported by fairness opinions from their respective financial advisors, indicates strong internal confidence. The strategic rationale highlights significant value creation through diversification, enhanced financial strength, and substantial identified synergies ($75 million annual run-rate by 2028). The low cyclicality of the combined entity's end markets and REV's substantial backlog provide a predictable revenue stream. Terex's proven integration playbook from its recent ESG acquisition further de-risks the integration process. While dilution for current Terex shareholders and integration risks exist, the overall strategic benefits and financial upside make this a compelling opportunity for long-term investors.

Keywords

Merger, Acquisition, Specialty Vehicles, Industrial Equipment, Terex Corporation, REV Group Inc., Stock-and-Cash Transaction, Synergies, Corporate Governance, Risk Factors, Shareholder Vote, NYSE, Financial Advisory, Tax Reorganization, Divestiture, SEC Filing, DEFM14A