Trump’s SPAC deal is in jeopardy as merger deadline approaches
Former US President Donald Trump on October 20 announced plans to launch his own social networking platform called “TRUTH Social”, which is expected to begin a beta launch for “invited guests” next month.
Chris Delmas | AFP | Getty Images
The fate of a planned merger between former President Donald Trump’s media company and a shell company seeking to take it public and give it an injection of cash is becoming increasingly hazy as the deadline approaches.
On Thursday, Digital World Acquisition Corp. there is a deadline for a merger with Trump Media and Technology Group, the owner of Truth Social. DWAC, a specialist asset acquisition company, has spent the past week struggling to muster enough shareholder votes to extend the deal deadline. The companies failed to complete the merger, and federal investigations around the deal and Trump have piled up.
The results of the shareholder vote will be announced at noon ET Thursday.
The DWAC was supposed to publicly announce the results at a special meeting on Tuesday, but CEO Patrick Orlando interrupted the meeting for two minutes to allow additional voting time. Earlier in the day, Reuters reported, citing sources familiar with the situation, that the vote had not taken place.
DWAC has previously warned that failure to approve the renewal could result in liquidation, resulting in a payout at the original share price of $10 per share. DWAC traded around $22 on Wednesday; in March, the shares were worth about $97.
The Trump Media and Technology Group is also facing hurdles. His Truth Social app, created by the former president after he was banned from Twitter following the January 6, 2021 uprising, has been banned from the Google Play Store.
The firm has signaled that it is still working on the deal.
“TMTG will continue to work with all stakeholders in connection with the planned merger and is hopeful that SEC officials will promptly complete their review without political interference,” CNBC said Tuesday.
But Trump indicated in a Truth Social post on Saturday that the issue is being addressed and that he doesn’t need a DWAC or a cash injection from the deal to keep the platform running.
“Google is doing well (I think?). The SEC is trying to hurt the funding company (SPAC),” the former president wrote to his 4 million Truth Social followers on Saturday. “Who knows? Anyway, I don’t need funding, I’m really rich!” Any private company???
The failure of the DWAC merger could burn retail investors who tried their hand at investing in SPAC because of the president.
Orlando may delay DWAC liquidation. Filing with the SEC on Wednesday. Orlando’s company and SPAC sponsor, ARC Global Investments II, plans to contribute $2.8 million of its own money to initiate a three-month extension.
DWAC, however, cannot be from the forest. The company is facing federal investigations into possible security breaches by the DWAC and the Trump Media and Technology Group. Trump is also facing multiple investigations related to the seizure of classified documents from the White House and his role in the Jan. 6 Capitol riots.
The DWAC also warned in a SEC filing that Trump’s decline in popularity could pose a risk to the deal.
Representatives from DWAC and Trump Media did not immediately respond to requests for comment on Wednesday.