Trump SPAC stock falls after merger renewal vote fails

Shares of Digital World Acquisition Corporation fell more than 15% Tuesday morning after it reportedly failed to garner enough shareholder votes to extend the deadline for its merger with Trump Media and Technology Group.

The special purpose acquisition company had a September 8 deadline to take former President Trump’s media company and its Truth Social platform public. SPAC has previously warned that failure to renew the merger could result in DWAC being liquidated.

Reuters, citing people familiar with the matter, said DWAC failed to secure enough shareholder votes for a one-year extension to complete the deal.

The merger will bring Trump’s company a cash injection. Trump created Truth Social after he was banned from Twitter after the January 6 Capitol riot.

The DWAC warned investors that Trump’s erratic popularity could pose a risk to the deal. The former president is also currently the subject of various investigations, including an investigation into the seizure of classified documents from the White House. Both DWAC and Trump Media are also under federal investigation for potential security breaches.

DWAC needed 65% shareholders to approve the expansion. CEO Patrick Orlando says he controls a 20% stake through his ARC Investments, but many of SPAC’s shareholders are retail investors.

Orlando campaigned in the media and posted on Truth Social to garner enough votes for renewal. DWAC is still trading above its liquidation price, which is expected to pay out around $10 per share. One can hope for the “built-in” extensions that Orlando mentioned earlier. Such an expansion will require sponsors to invest additional funds in the credibility of the company.

Voting results have not yet been announced by DWAC. The EGM is scheduled for Tuesday at noon.