Workhorse Group Inc. (NASDAQ:WKHS) saw its stock fall by 13.6% after revealing it is in early-stage discussions about a potential merger that could significantly dilute current shareholders’ holdings.
The Ohio-based manufacturer of zero-emission commercial vehicles announced it is negotiating a possible deal with a privately held U.S. electric commercial vehicle company. The structure being discussed would involve the private firm merging into a wholly owned subsidiary of Workhorse.
Although final terms have not been determined, Workhorse said the private company’s existing investors are expected to control “a substantial majority” of the combined company’s outstanding common stock following the merger’s completion.
As part of the proposed deal, Workhorse would also refinance its senior secured convertible notes and cancel associated warrants. The refinancing would be funded by entities affiliated with the private company’s largest equity holder and would involve a roughly $20 million sale-leaseback agreement on Workhorse’s Union City, Indiana manufacturing plant.
The company explained that this arrangement would allow it to repay all outstanding debt under the notes without incurring redemption premiums or penalties. In addition, Workhorse would issue three million new common shares to the institutional investor holding the notes, with some of those shares being subject to trading limitations.
As of July 10, 2025, Workhorse had around $33 million in outstanding obligations related to the convertible notes. To facilitate continued talks, the two companies entered a 14-day exclusivity period beginning July 14, during which Workhorse has agreed not to pursue negotiations with other potential partners—though the agreement includes a “fiduciary out” clause allowing for exceptions under certain circumstances.
The company cautioned that no final agreements have been signed, and the deal, if pursued, would require shareholder and Nasdaq approval, among other conditions.
This content is for informational purposes only and does not constitute financial, investment, or other professional advice. It should not be considered a recommendation to buy or sell any securities or financial instruments. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.