Shares of Workhorse Group Inc (NASDAQ:WKHS), a maker of electric trucks, are soaring after President Trump tweeted Wednesday that the company was buying an idled General Motors plant in Lordstown, Ohio.
GREAT NEWS FOR OHIO! Just spoke to Mary Barra, CEO of General Motors, who informed me that, subject to a UAW agreement etc., GM will be selling their beautiful Lordstown Plant to Workhorse, where they plan to build Electric Trucks. GM will also be spending $700,000,000 in Ohio...— Donald J. Trump (@realDonaldTrump) May 8, 2019
The top US automaker confirmed in a statement Wednesday that talks between the companies were underway.
The stock’s value more than tripled Wednesday and climbed another 27% in pre-market trading Thursday before falling about 9% after the opening bell.
Under the terms of the deal, the plant would technically be acquired by a newly-created entity led by Workhorse founder Steve Burns, with Workhorse holding a minority interest.
Financial details of the potential sale were not disclosed.
The Loveland, Ohio-based startup, which Reuters reported has lost $150 million since its founding in 2007, had $2.8 million cash on hand at the end of the first quarter, according to results posted Tuesday.
The deal still requires approval from the United Auto Workers union. On Wednesday, the group said that GM should continue operating the plant. In 2016, GM employed 4,500 people at the facility. In November, the automaker announced a plan to end production at five North American plants.
Meanwhile, Workhorse is in competition for a contract with the US Postal Service to manufacture a new vehicle fleet, according to the Cincinnati Business Courier. However, even if it wins the deal, it’s unclear whether USPS vehicles would be manufactured at the Lordstown plant since Workhorse itself would only own a minority stake.
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