Digital World Acquisition Corp. ( DWAC ) fell as the special-purpose takeover firm, aiming to take former President Donald Trump’s social media and technology platform public, postponed a shareholder vote until Nov. 3 on whether an extension of the deadline to complete the merger was approved.
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The results of a shareholder vote on Trump’s one-year extension to complete the merger were expected on Monday. However, CEO Patrick Orlando postponed the meeting until November 3, 2022.
“We are working diligently to record all the votes that continue to come in from our shareholders and are postponing this meeting to provide additional time for shareholders to cast their votes,” Orlando said during the meeting.
DWAC’s original deadline to complete its merger with Trump Media and Technology Group, the parent of conservative social media platform Truth Social, had been last month. However, a Securities and Exchange Commission investigation into the deal has delayed proceedings. On September 8, DWAC postponed a shareholder vote on whether to approve a deadline extension, setting Monday as the new date.
Without shareholders completing a vote last month, the SPAC’s sponsor, ARC Global Investments, contributed about $2.9 million to extend the merger deadline to Dec. 8, according to federal filings. DWAC management is offering shareholders the opportunity to extend the term until September 8, 2023.
Shares of DWAC fell 3.2% to 16.8 during Monday trading. The stock is down 90% from an Oct. 22 high of 175, when news of the Trump merger deal first broke.
DWAC vote or liquidation
Aug. 25 SEC filings showed DWAC asked shareholders to approve an extension to complete its business merger.
DWAC had set the vote for September 6 and warned investors that if the delay was not granted until September 2023, the company could cease operations and liquidate shares.
“Without the extension, the board believes there is a significant risk that, despite our best efforts, we will not be able to complete the business combination prior to the completion date,” the company wrote in its federal filing on Dec. August
The filings also show the cash hemorrhaging of the SPAC. In an SEC filing last month, DWAC disclosed that between Sept. 19 and Sept. 23 it had received termination notices from public private equity (PIPE) investors representing about $139 million.
This comes after DWAC reported in its quarterly report on August 23 that it had lost $6.2 million in the first half of the year.
SEC DWAC probes
DWAC announced in October 2021 that it intended to merge with Trump Media and Technology Group, with the goal of taking Trump’s company public. However, the SEC began investigating DWAC’s business dealings in December.
After the merger was announced, DWAC’s stock rose, but observers were skeptical about how quickly the deal came together. Digital World shares began trading on September 30, 2021. At the time, the stock briefly rose more than 1,600% in the two days after Trump announced the media merger on September 20 October 2021.
Shares retreated from those highs, but traded as much as 914% above the September 2021 launch price through March.
In late June, a DWAC SEC filing revealed that a federal grand jury in the Southern District of New York had subpoenaed the company’s board members seeking more details about the merger agreement. At the time, DWAC warned that Justice Department and SEC investigations risked slowing or killing the merger.
The New York Times reported that Trump and DWAC CEO Patrick Orlando had discussed a deal months before the SPAC went public.
DWAC Stock and Trump’s Social Media
DWAC shares fell 5% on Tuesday after news that Elon Musk had changed course and that his $44 billion Twitter (TWTR) was back on track. This raises the possibility that Trump will return to Twitter, potentially before the midterm elections in November.
Also, on Thursday evening, Musk tweeted this Tesla (TLSA) was beginning production of the Tesla Semi tractor-trailer trucks. Deliveries to PepsiCo (PEP) will start on December 1. Musk said the electric semi-trucks will have a range of 500 miles per charge.
The jobs report is still too strong for the Fed
Truth Social was launched after Twitter shut down Trump’s Twitter account following the January 6 riots at the US Capitol last year. The Trump-backed social media app launched in February, with a number of users citing bugs and difficulty creating accounts.
A return to Twitter could redirect a large portion of Truth Social’s audience to the more popular channel. Also, in an Aug. 25 federal filing, DWAC said a potential risk to the success of its business merger is Trump’s popularity, or lack thereof.
“If President Trump becomes less popular or there are more controversies that damage his credibility or people’s desire to use a platform associated with him,” that could affect the deal, DWAC wrote in the filing.
Last month, DWAC presented a copy of a Sept. 3 Truth Social post by Trump. The former chairman said the social media platform is “doing very well” but that the SEC is trying to prevent the SPAC from completing the deal.
“Who knows? In any case, I don’t need financing, ‘I’m very rich!’ Anyone from private enterprise???” Trump said.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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