DEFA14A: Workhorse Merger with Motiv Gains Key Proxy Firm Support

Workhorse Group Inc. announced that leading independent proxy advisory firms ISS and Glass Lewis recommend shareholders vote FOR the proposed merger with Motiv Electric Trucks.

Summary

• Workhorse Group Inc. (Nasdaq: WKHS) announced that leading independent proxy advisory firms Institutional Shareholder Services (ISS) and Glass Lewis & Co. (Glass Lewis) recommend that Workhorse shareholders vote FOR the Company's transaction with Motiv Electric Trucks (Motiv).
• The Annual General Meeting of Shareholders is scheduled for November 12, 2025, where shareholders will vote on the merger and other proposals.
• ISS stated that the transaction warrants support due to its compelling strategic rationale, complementary businesses, expected scale benefits, material cost synergies, and addresses Workhorse's 'going concern risk,' suggesting greater value through the merger compared to liquidation or bankruptcy.
• The combined company is anticipated to offer a platform for scalable growth, enhanced scale to reduce unit costs, improved competitiveness against other OEMs, and access to complementary blue-chip customer bases, having collectively served 10 of the largest medium-duty fleets in North America.
• The merger is expected to create a strong financial foundation with a simplified capital structure, access to new financing at close, and the ability to raise additional capital post-completion.
• Potential to achieve at least $20 million in cost synergies by the end of 2026, primarily through reductions in R&D, G&A, and facility costs.

Sentiment

Score: 7

Explanation: The announcement of leading proxy advisory firms recommending the merger is a significant positive development for Workhorse, especially given the stated 'going concern risk.' The potential for substantial cost synergies and a stronger market position post-merger indicates a positive outlook, though the underlying financial fragility prior to the merger tempers extreme optimism.

Positives

• Leading independent proxy advisory firms ISS and Glass Lewis recommend voting FOR the merger with Motiv Electric Trucks.
• The transaction offers a platform for scalable growth, built on a diverse product portfolio and top fleet relationships.
• Enhanced scale is expected to reduce unit costs and enable the combined company to more effectively compete with industry OEMs.
• Access to complementary blue-chip customer bases, with the combined entities having served 10 of the largest medium-duty fleets in North America.
• A strong financial foundation is anticipated, including a simplified capital structure and access to new financing.
• Compelling synergy opportunities with the potential to achieve at least $20 million of cost synergies by the end of 2026.

Negatives

• ISS's report highlighted Workhorse as a 'going concern risk,' indicating significant financial instability prior to the merger.
• The merger is presented as a superior alternative to a 'liquidation scenario or other bankruptcy process,' underscoring the company's precarious standalone position.

Risks

• The parties' ability to successfully integrate their businesses and technologies, which may result in the combined company not operating as effectively and efficiently as expected.
• The risk that the expected benefits and synergies of the proposed transaction may not be fully achieved in a timely manner, or at all.
• Workhorse's ability to obtain the approval of its shareholders required to consummate the proposed transaction and the timing of the closing.
• The risk that conditions to the transaction are not satisfied on a timely basis or at all, or the failure of the transaction to close for any other reason or on anticipated terms.
• Any regulatory approval, consent, or authorization required for the proposed transaction may not be obtained or may be subject to unanticipated conditions.
• The occurrence of any event, change, or other circumstance that could give rise to the termination of the proposed transaction.
• Unanticipated difficulties, liabilities, or expenditures relating to the transaction.
• The effect of the announcement, pendency, or completion of the proposed transaction on the parties' business relationships and business operations generally.
• The effect of the announcement or pendency of the proposed transaction on Workhorse's common stock prices and uncertainty as to the long-term value of the combined company's common stock.
• Risks that the proposed transaction disrupts current plans and operations of the parties and their respective management teams and potential difficulties in hiring or retaining employees.
• Ability to develop and manufacture the product portfolio, including the W4 CC, W750, and W56 and other programs.
• Ability to attract and retain customers for existing and new products.
• Ongoing and anticipated changes in the U.S. political environment, including those resulting from the new Presidential Administration, control of Congress, and changes to regulatory agencies.
• The implementation of changes to the existing tariff regime by the new Presidential Administration and measures taken in response to such tariffs by foreign governments.
• Risks associated with obtaining orders and executing upon such orders.
• The unavailability, reduction, elimination, or adverse application of government subsidies and incentives or any challenge to or failure by governmental entities to adopt or enforce regulations.
• Changes in attitude toward environmental, social, and governance matters among regulators, investors, and business partners.
• Supply chain disruptions, including constraints on steel, semiconductors, and other material inputs and resulting cost increases.
• Ability to capitalize on opportunities to deliver products to meet customer requirements.
• Limited operations and need to expand and enhance elements of the production process to fulfill product orders.
• General inability to raise additional capital to fund operations and business plan.
• Ability to receive sufficient proceeds from current and any future financing arrangements to meet immediate liquidity needs.
• Ability to maintain compliance with the listing requirements of Nasdaq and the impact of any steps taken, including reverse splits of common stock.
• Ability to protect intellectual property.
• Market acceptance of products.
• Ability to obtain sufficient liquidity from operations and financing activities to continue as a going concern.
• Ability to control expenses and the effectiveness of cost control measures, including the effects of furloughing employees.
• Potential competition, including without limitation shifts in technology.
• Volatility in and deterioration of national and international capital markets and economic conditions.
• Global and local business conditions, acts of war (including conflicts in Ukraine and the Middle East), and/or terrorism.
• The prices being charged by competitors.
• Inability to retain key members of the management team.
• Inability to satisfy customer warranty claims.
• The outcome of any regulatory or legal proceedings, including with Coulomb Solutions Inc.
• Ability to realize the benefits of the sale and leaseback transaction of the Union City Facility.

Future Outlook

The combined company is expected to achieve scalable growth, reduced unit costs, expanded customer reach, and a strong financial foundation. Management anticipates at least $20 million in cost synergies by the end of 2026. The merger is positioned to allow the combined entity to more effectively compete in the medium-duty EV commercial vehicle market.

Management Comments

• "We are pleased that ISS and Glass Lewis recognize that our transaction with Motiv represents a significant milestone for our Company and gives our shareholders the opportunity to participate in the potential upside of a leader in the medium-duty EV commercial vehicle market." Rick Dauch, CEO of Workhorse.
• "We encourage our shareholders to vote FOR our transaction with Motiv today, as well as the other Annual Meeting proposals." Rick Dauch, CEO of Workhorse.

Industry Context

The proposed merger positions Workhorse to enhance its competitive standing in the rapidly evolving zero-emission commercial vehicle market. By combining with Motiv, Workhorse aims to achieve greater scale and cost efficiencies, crucial for competing with both established legacy OEMs and emerging pure-play electric vehicle manufacturers in the medium-duty segment. The focus on cost synergies and expanded customer bases reflects a broader industry trend towards consolidation and strategic partnerships to navigate capital-intensive development and production.

Comparison to Industry Standards

• The combined entity aims to more effectively compete with the industry's pure-play electric and legacy OEMs on a total cost of ownership basis.
• Together, Motiv and Workhorse have served 10 of the largest medium-duty fleets in North America, indicating a significant market presence compared to smaller, niche players in the EV commercial vehicle sector.

Legal Proceedings

• The outcome of any regulatory or legal proceedings, including with Coulomb Solutions Inc., is a potential risk factor for the company.

Stakeholder Impact

• Shareholders: Opportunity to participate in the potential upside of a leader in the medium-duty EV commercial vehicle market and avoid a potential liquidation or bankruptcy scenario.
• Employees: Potential for disruption to current plans and operations, and difficulties in hiring or retaining employees as a result of the proposed transaction. Cost reductions through R&D, G&A, and facility costs could imply workforce adjustments.
• Customers: Expected benefits include access to a broader product portfolio, enhanced scale, and potentially more competitive offerings.
• Creditors: A stronger financial foundation and simplified capital structure could improve the combined company's creditworthiness.

Next Steps

• Shareholders are urged to vote on the merger and other Annual Meeting proposals by November 12, 2025.
• The combined company will work towards achieving at least $20 million in cost synergies by the end of 2026.

Key Dates

Recommendation

The recommendation to vote FOR the merger by leading proxy advisory firms is a significant positive, potentially averting a 'going concern risk' and offering a path to scalable growth and cost synergies. However, the company's pre-merger financial instability and the inherent risks of integration and achieving projected synergies warrant a 'hold' stance for investors until the merger is finalized and the combined entity demonstrates tangible progress on its strategic objectives and financial health.

Keywords

Workhorse Group Inc., Motiv Power Systems, Merger, Acquisition, Electric Vehicles, Commercial Vehicles, EV, Proxy Vote, Shareholder Meeting, WKHS, Medium-Duty Trucks, Zero-Emission Vehicles, Corporate Governance, SEC Filing