SPAC linked to Trump’s media company gets merger extension

Investors in the blank check company that plans to merge with former President Donald J. Trump’s social media company have agreed to extend the deadline for closing the deal by nine months.

But the case could lose its appeal. The centerpiece of his company’s offering is Truth Social, a right-wing alternative to Twitter – and Twitter has now reinstated Mr Trump’s account, giving him the chance to return.

Patrick Orlando, the lead backer and chief executive of Digital World Acquisition Corp., the so-called special purpose acquisition company, announced that shareholders approved the extension in an online meeting on Tuesday.

The shareholder extension keeps alive the potential for Trump Media & Technology Group to tap into the $300 million that Digital World raised from investors after its IPO about 14 months ago.

The extra time to close the deal still doesn’t mean it’s a certainty.

Federal prosecutors investigated potentially inappropriate communications between company officials before Digital World listed last October and unusual trading in Digital World securities before the merger announcement. The Securities and Exchange Commission is conducting its own investigation. Their findings could torpedo the merger.

But Trump Media now also has to deal with its own viability, given that Mr. Trump is once again welcome on Twitter. Over the weekend, Elon Musk, the billionaire tech entrepreneur and new owner of Twitter, reinstated Mr Trump’s account. The social media platform’s former management had suspended Mr. Trump’s account after the January 6, 2021 attack on the US Capitol by Mr. Trump’s supporters.

Mr. Trump’s banishment from Twitter was part of the inspiration for the creation of Truth Social, and it has been his primary platform for communicating with supporters.

Mr Trump said he had no intention of returning to Twitter. Additionally, a licensing agreement between him and Trump Media requires him to post on Truth Social several hours before posting on any other social media platform. The license agreement allows an exception for political messages.

Still, the lure of Twitter could prove strong for Mr. Trump in light of his recent announcement that he is running for president again in 2024. His recently relaunched account on Mr. Musk’s platform nearly 88 million subscribers, compared to 4.6 million subscribers. Mr. Trump has on Truth Social.

“Twitter sort of puts an interesting spin on investors,” said Kristi Marvin, a former investment banker and founder of SPACInsider, a website that collects data on SPACs. “Trump said he plans to stick with Truth Social, but do you trust him?”

Mr. Trump may have a financial incentive to stay off Twitter. If the merger with Digital World is completed, he will own 70 million shares. In September, Forbes reinstated Mr. Trump in its list of the richest Americans, a ranking based in part on the value of Trump Media if it completes the merger with Digital World.

Had Digital World not secured the extension, it would have had to liquidate on Dec. 8 and return the nearly $300 million it raised to its roughly 30 million shareholders, many of whom are individuals rather than corporations. institutions.

SPAC needed 65% of shareholders to approve the extension, but struggled to meet that threshold because a large portion of the company’s investors are hard-to-reach small investors. Since September 6, Digital World has had to extend the deadline for shareholders to approve the proposal six times.

“This vote was necessary because the SEC is trying to sabotage our merger and harm President Trump for purely political reasons,” Trump Media spokeswoman Shannon Devine said in a statement.

The shareholder vote was a victory for Mr. Orlando, who saw two other SPACs he backed fail to complete mergers. Half an hour before announcing the shareholder vote, Mr. Orlando showed up at an IPO Edge-sponsored event and said that if the extension were approved, he would “continue to work day-to-day to move our merger proposal.

Even if the merger is completed, it is unclear whether it will be a boon for Digital World shareholders given that Mr. Trump will own well over half of the company. Concentration of ownership with one person has the potential to dilute the value of shares held by retail investors.

Shares of Digital World closed at $22.73, up 5.7% for the day.

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