Digital World Acquisition Corp. (DWAC) shares plunged Tuesday after news reports that special-purpose company shareholders do not support the approval of an extension of the TBEN for the attempted SPAC merger with former President Donald Trump’s technology and social media platform.
Reuters reported Monday evening that so far not enough shareholders have voted for a one-year extension to complete the merger agreement. Federal documents say the vote will be completed on Tuesday.
DWAC shares fell about 2o% early Tuesday before trading in the market fell 10.6%. Shares are now down nearly 90% from an October 22 high of 175. DWAC is at its lowest level since October 21, when news of the Trump merger deal first broke.
On Aug. 25, the filings of the federal stock exchange commission showed that DWAC asked shareholders to approve an extension to complete the corporate merger with Trump Media and Technology Group, or TMTG.
Trump Media and Technology Group is the mother of conservative social media platform Truth Social.
DWAC set the vote on Sept. 6, warning investors that if the delay to September 2023 is not allowed, the company will cease operations and liquidate shares.
“Without the extension, the board believes there is a significant risk that, despite our best efforts, we may not complete the business combination on or before the closing date,” the company wrote in its August 25 federal filing.
The blank check company added that until the time of the meeting, investors could redeem outstanding common stock for $10.20 per share. After the meeting, stock prices would be reassessed according to the then-current amounts in the company’s trust account.
In its August 23 quarterly report, DWAC also reported that it had lost $6.2 million in the first half of the year.
SEC probes DWAC
DWAC announced in October that it planned to merge with Trump Media and Technology Group, with the aim of making Trump’s company public. However, the U.S. Securities and Exchange Commission began investigating DWAC’s business dealings in December.
Following the announcement of the merger, DWAC inventory increased. Observers, however, were skeptical about the speed at which the deal came about. Shares of Digital World began trading on September 30.
In late June, a federal DWAC filing revealed that a federal grand jury in the Southern District of New York had subpoenaed the company’s board members to request more details about the merger deal. At the time, DWAC warned the Justice Department and SEC investigations threatened to delay or terminate the merger altogether.
The New York Times reported that Trump and Orlando had discussed a deal months before DWAC went public. These conversations may violate securities law.
DWAC and Trump’s Social Media
Truth Social Launched After Trump Was Banned From Twitter (TWTR), after the riots at the US Capitol on January 6 last year. Recent congressional hearings on the riots have placed greater emphasis on the former president’s actions during that time.
The Trump-backed social media app launched in February, with a number of users reporting glitches and account creation issues.
In its Aug. 25 federal filing, DWAC said Trump’s popularity is a potential risk to the success of its corporate merger.
“If President Trump becomes less popular or if there are further controversies that damage his credibility or people’s desire to use a platform associated with him, and from which he will benefit financially, TMTG’s business results and outcome will of the proposed business combination, may be adversely affected,” DWAC wrote in the filing.
Follow Kit Norton on Twitter @KitNorton for more coverage.
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