Shareholders uneasy over Donald Trump's Truth Social merger as criminal probes swirl: report

06 September 2022

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The company that is exploring a potential merger with former President Donald Trump’s Truth Social platform has reportedly failed to secure proper stakeholder backing for a one-year extension to complete its special purpose acquisition company (SPAC).

According to Reuters, Digital World Acquisition Corp (DWAC.O), the SPAC involved in the merger, signed its deal with Truth Social back in October of last year.

“At stake is a $1.3 billion cash infusion that Trump Media & Technology Group (TMTG), which operates the former U.S. president's Truth Social app, stands to receive from Digital World Acquisition Corp (DWAC.O), the special purpose acquisition company (SPAC) that inked a deal last October to take TMTG public,” the outlet reports.

According to the news outlet, those with details about the vote spoke under the condition of anonymity because the full vote tally has yet to be made public.

Per Reuters, inside sources explained: “Digital World needs 65% of its shareholders to vote in favor of the proposal to extend its life by 12 months for the move to become effective. By Monday evening, far fewer Digital World shareholders than those required had voted in favor.”

The pending transaction has reportedly been on thin ice due to a flurry of criminally investigative probes into the circumstances surrounding the business deal. However, Digital World was still optimistic that the Securities and Exchange Commission (SEC) would approve the transaction moving forward.

The outcome of the vote tally is expected to be publicly announced sometime on Tuesday, September 6.

The news outlet also laid out a possible scenario going forward.

“Were Digital World to fail in its bid to get its shareholders to back the one-year extension, its management has the right to extend its life without shareholder approval by up to six months,” Reuters reported. “It is unclear whether Digital World will pursue this option and if it would provide enough time for regulators to reach a conclusion on whether to allow the deal to proceed.”

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