DEFA14A: Workhorse to Merge with Motiv Power Systems

Workhorse Group Inc. announced a definitive agreement to merge with Motiv Power Systems, Inc., aiming to create a leading North American medium-duty electric truck OEM.

Summary

• Workhorse Group Inc. and Motiv Power Systems, Inc. entered into an Agreement and Plan of Merger dated August 15, 2025.
• The merger is intended to create a leading North American medium-duty electric truck OEM by combining Motiv's product portfolio and fleet relationships with Workhorse's vehicles, manufacturing capabilities, and national dealer network.
• The combined company will target the $23 billion medium-duty electric truck segment (Class 4-6), based on a 2025 annual forecast.
• The Union City, Indiana production facility is expected to have a manufacturing capacity of 5,000 trucks per year.
• The combined customer base includes 10 of North America's largest medium-duty fleets with low overlap and significant repeat purchases.
• The transaction values the combined company at approximately $105 million.
• Motiv's controlling investor is expected to initially own approximately 62.5% of the combined company, Workhorse shareholders approximately 26.5%, and Workhorse's existing senior secured lender approximately 11% (all subject to potential adjustments and future dilution).
• The merger includes $45 million in new funding, with $25 million allocated to Workhorse in the near-term and $20 million to the combined company post-close.
• Financing includes a $20 million sale-leaseback for Workhorse's Union City facility and $5 million in secured, convertible note financing.
• An additional $20 million in debt financing is expected from entities affiliated with Motiv's controlling investor upon closing, comprising a ~$10 million revolving credit facility and ~$10 million ABL facility for manufacturing costs.
• The combined company will seek to raise additional equity financing post-closing to drive its strategic direction.
• The merger is expected to close in Q4 2025, subject to Workhorse shareholder approval and other customary closing conditions.

Sentiment

Score: 7

Explanation: The merger presents a strong strategic move for long-term growth, market positioning, and cost efficiencies, supported by significant new funding. However, the substantial dilution for existing Workhorse shareholders and the inherent risks of integration and future capital raises temper the immediate positive sentiment.

Positives

• The merger is positioned to offer a broader portfolio of high-performing commercial EVs at lower unit costs.
• Combined scale and strengths are expected to reduce unit costs, enabling more effective competition with pure-play electric and legacy OEMs.
• Complementary customer bases are anticipated to lead the next phase of large-scale EV adoption.
• The transaction strengthens the financial position and creates opportunities for margin expansion, providing greater flexibility for future growth initiatives.
• The combined company is intended to be better positioned to raise additional capital post-close with a simplified capital structure.
• Potential to achieve at least $20 million of cost synergies by the end of 2026 through R&D, G&A, and facility cost-reductions.
• Product and engineering approach aims to use software, hardware, and IP to pursue additional cost savings and enhance technology.
• Secured $45 million in new funding, including $25 million for Workhorse in the near-term and $20 million for the combined company post-close.
• Expected manufacturing capacity of 5,000 trucks per year at the Union City, Indiana facility.

Negatives

• Workhorse shareholders are expected to maintain only approximately 26.5% ownership initially, indicating significant dilution.
• The combined company will seek to raise additional equity financing post-closing, which could lead to further dilution for existing shareholders.

Risks

• The parties' ability to successfully integrate their businesses and technologies may result in the combined company not operating as effectively and efficiently as expected.
• 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 shareholder approval and the timing of the closing, including the risk that conditions are not satisfied or the transaction fails to close.
• Any required regulatory approval, consent, or authorization may not be obtained or may be subject to unanticipated conditions.
• The occurrence of any event, change, or circumstance that could lead 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 business relationships and operations.
• The effect of the announcement or pendency of the proposed transaction on Workhorse's common stock prices and uncertainty regarding the long-term value of the combined company's common stock.
• Risks that the proposed transaction disrupts current plans and operations and potential difficulties in hiring or retaining employees.
• Ability to develop and manufacture the product portfolio, including the W4 CC, W750, and W56 programs.
• Ability to attract and retain customers for existing and new products.
• Ongoing and anticipated changes in the U.S. political environment, including tariffs and regulatory changes.
• Risks associated with obtaining and executing upon orders.
• The unavailability, reduction, elimination, or adverse application of government subsidies and incentives.
• Changes in attitude toward environmental, social, and governance matters.
• Supply chain disruptions, including constraints on steel, semiconductors, and other material inputs, and resulting cost increases.
• Limited operations and the need to expand and enhance production processes to fulfill product orders.
• General inability to raise additional capital to fund operations and business plan.
• Ability to receive sufficient proceeds from current and future financing arrangements to meet immediate liquidity needs, and potential costs, dilution, and restrictions from such financing.
• Ability to maintain compliance with Nasdaq listing requirements and the impact of any steps taken, such as reverse stock splits.
• 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 and control expenses.
• The effectiveness of cost control measures and their impact on operations, including employee furloughs.
• Potential competition, including 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 positioned for rapid innovation and scalable growth, aiming to compete more effectively with industry pure-play electric and legacy OEMs. It expects to capitalize on new opportunities, serve more customers with competitively advantaged electric offerings, and lead the next phase of large-scale EV adoption. The merger is intended to strengthen the financial foundation, create opportunities for margin expansion, and better position the combined entity to raise additional capital post-close. At least $20 million in cost synergies are targeted by the end of 2026, and the combined company will seek additional equity financing post-closing to drive its strategic direction. The merger is expected to close in Q4 2025.

Management Comments

• Scott Griffith, current Motiv CEO, is expected to serve as the combined company's CEO.
• Rick Dauch, current Workhorse CEO, is expected to serve as an Advisor to the combined company.

Industry Context

This merger addresses the rapidly expanding commercial electric vehicle market, particularly the medium-duty segment, by combining complementary strengths to achieve greater scale and reduce unit costs. The move positions the combined entity to enhance its competitiveness against both established legacy OEMs transitioning to EV and other pure-play EV manufacturers, aligning with the broader industry trend towards fleet electrification and sustainable transportation solutions.

Comparison to Industry Standards

• The filing states an intention to compete more effectively with the 'industry's pure-play electric and legacy OEMs' and to provide a 'best-in-class customer experience,' but does not provide specific comparable companies, projects, or results for direct assessment against global benchmarks.

Management Changes

Legal Proceedings

• The outcome of any regulatory or legal proceedings, including with Coulomb Solutions Inc., is listed as a risk factor that could materially affect actual results.

Related Party Transactions

• Motiv's controlling investor is expected to initially own approximately 62.5% of the combined company.
• Workhorse's existing senior secured lender will have rights to receive common stock representing approximately 11% of the combined company.
• Entities affiliated with Motiv's controlling investor are expected to provide approximately $20 million in additional debt financing upon closing.

Stakeholder Impact

• **Shareholders (Workhorse):** Will experience significant dilution, maintaining approximately 26.5% initial ownership, but stand to benefit from potential long-term value creation through enhanced market position, cost synergies, and a stronger financial foundation.
• **Employees:** Potential for R&D, G&A, and facility cost-reductions by the end of 2026, which may imply workforce adjustments. New leadership structure will be implemented.
• **Customers:** Expected to benefit from a broader product portfolio, more competitively advantaged electric offerings, enhanced technology, and a 'best-in-class customer experience'.
• **Suppliers:** Potential for increased demand due to combined scale, but also possible pressure for cost efficiencies as part of synergy goals.
• **Creditors:** Workhorse's senior secured lender will receive common stock, and new debt financing arrangements are being established with Motiv's controlling investor affiliates.

Next Steps

• Workhorse intends to file a Proxy Statement on Schedule 14A with the SEC regarding the proposed transaction.
• Workhorse shareholders must approve the merger.
• The merger is subject to customary closing conditions, including the debt financing commitment.
• The merger is expected to close in Q4 2025.
• The combined company will seek to raise additional equity financing post-closing to drive its strategic direction.

Key Dates

Recommendation

The merger with Motiv Power Systems presents a significant strategic opportunity for Workhorse to achieve scale, reduce costs, and expand its product portfolio in the growing medium-duty EV market. The new funding and potential synergies are positive indicators for future operational improvements. However, the substantial dilution for current Workhorse shareholders and the inherent execution risks associated with integrating two companies and raising additional equity post-closing warrant a cautious 'hold' recommendation. Investors should monitor the integration process, synergy realization, and future capital raises before making further investment decisions.

Keywords

Electric Vehicles, Commercial EVs, Medium-Duty Trucks, Merger, Workhorse, Motiv Power Systems, EV Manufacturing, Fleet Electrification, SEC Filing, Corporate Governance