Workhorse Group Inc. (NASDAQ:WKHS) shares sank Monday after the company disclosed it is negotiating a potential merger with a privately held U.S. manufacturer of electric commercial vehicles.
Under the proposed structure, the target company would be merged into a new Workhorse subsidiary in exchange for newly issued shares of Workhorse stock.
If the transaction proceeds, investors in the private company would hold a majority stake in the combined entity. The companies intend for Workhorse’s shares to remain listed on Nasdaq, pending regulatory and shareholder approvals.
Also Read: Workhorse Misses On FY24 Revenue And EPS, But Cost Cuts Narrow Losses
The discussions also include a refinancing plan to eliminate Workhorse’s $33 million in outstanding convertible notes. This plan involves a new convertible note, a $20 million sale-leaseback of its Union City, Indiana facility, and the cancellation of warrants held by an institutional investor. In return, the investor would receive 3 million new shares, some of which may be subject to trading restrictions.
These steps are expected to occur concurrently with a final agreement. Workhorse signed an exclusivity agreement on July 14, barring negotiations with other parties for 14 days, unless a better offer arises.
No definitive agreements have been reached, and there is no guarantee that the transaction or related financing will close.
Recent Volatility and Strategic Challenges
Workhorse completed a 1-for-12.5 reverse stock split in March to regain Nasdaq compliance. Broader EV industry headwinds, such as the phase-out of the federal $7,500 EV tax credit under the Trump-backed “Big Beautiful Bill”, could influence pricing decisions and demand going forward.
Related ETFs: Global X Autonomous & Electric Vehicles ETF (NASDAQ:DRIV), iShares Self-Driving EV and Tech ETF (NYSE:IDRV).
Price Action: WKHS shares are trading lower by 20.8% to $3.50 at last check Monday.
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