Digital World Acquisition Corp., the blank-check firm seeking to merge with former President Donald Trump’s media company, will get another extension to complete its troubled deal.
Shareholders voted to grant DWAC (DWAC) another year to pull off its merger with Trump Media & Technology Group, which owns Truth Social, according to an SEC document posted Wednesday. The groups now have until September 8, 2024 to combine.
The extension was approved by about 72% of stockholders, according to a regulatory filing Wednesday.
Nearly two years ago, former President Donald Trump’s media group agreed to combine with DWAC to bring the company public through what’s known as a SPAC deal, or a Special Purpose Acquisition Corporation. But the proposed merger has raised eyebrows from legal experts and drawn scrutiny from regulators and prosecutors.
The extension was a major win for Trump’s platform. Had shareholders voted against the extension, DWAC would have liquidated, and the social media platform would have to find another financial backer by September 8, 2023. It also would have been required to return $300 million to shareholders.
It’s the second time DWAC asked for an extension for closing the deal, the first being in September 2022.
That doesn’t mean the merger is bound to happen.
In July, DWAC agreed to settle with the SEC. The agency said DWAC violated anti-fraud laws by failing to disclose to investors that it was actively pursuing a merger deal with TMTG before it went public. DWAC agreed to a cease-and-desist order and to pay an $18 million penalty if it closes a merger transaction.
In June, federal prosecutors arrested three investors on insider trading charges related to Digital World’s deal with Trump’s media company. According to the indictment, the investors allegedly made more than $22 million by illegally trading on knowledge that DWAC would purchase TMTG — before it was public knowledge.
“With this vote of confidence from DWAC shareholders, we will proceed as quickly as possible to complete our merger, which we expect will open up tremendous new opportunities to grow and expand TMTG and the Truth Social platform,” TMTG CEO and former Republican Congressman Devin Nunes said.
Shares of DWAC jumped to $18.58 Tuesday morning when reports of the extension published, but that pales in comparison to October 2021, where at one point it was trading at $175 a share.
Read the full article here