Former President Donald Trump at a rally in Wilkes-Barre, Pennsylvania on September 3.
Kyle Mazza/Anadolu Agency via Getty Images
Digital World Acquisition Corp. shares dropped 24% Tuesday as the SPAC linked to Donald Trump faces potential liquidation.
Reuters reported that not enough Digital World shareholders have voted to extend a merger deadline with Trump’s social media company.
The SPAC needs 65% of shareholders to vote to approve the deal extension with Trump Media & Technology Group.
Digital World Acquisition Corp. shares tumbled more than 20% on Tuesday following a Reuters report the company hasn’t won enough votes from shareholders to give it another 12 months to complete a proposed merger with Donald Trump’s social media company.
Without enough support, the special purpose acquisition company is set to liquidate on Thursday and return money it had raised in its September 2021 initial public offering, the report said.
Shares in premarket trade dropped as much as 24% to $19.07, the lowest price since October 2021, when the stock first soared on Digital World’s plans to merge with Trump Media & Technology Group. TMTG runs the Truth Social networking app. Shares of Digital World in 2022 have lost about 51%.
Digital World had sought its shareholders’ approval to extend a merger deadline by one year, to September 8, 2023. It needs 65% of shareholders to vote for the extension. By Monday evening, far fewer than that had voted in favor of the extension, sources told Reuters. Digital World had previously said it may be forced to liquidate if a business combination doesn’t materialize.
Digital World is scheduled to announce the vote results at a special meeting on Tuesday. Executives don’t believe they will be able to secure enough support in time and have started to consider alternative options, sources told Reuters.
At stake is a $1.3 billion cash infusion that Trump’s company stood to receive from the SPAC, according to the report. If the deal were to be completed, TMTG would receive $293 million from Digital World as well as $1 billion committed by investors in the form of a private investment in public equity, or PIPE.
In August, Digital World raised the prospect of delaying the merger plans, saying that Trump’s business could be hurt by a potential decline in his popularity. Trump is the subject of investigations related to the 2020 election, the January 6, 2021, insurrection at the US Capitol, and his finances.
The FBI raided Trump’s Mar-a-Lago resort residence in Palm Beach, Florida, in August as part of a Department of Justice probe into potential obstruction of justice and Espionage Act violations by Trump. On Monday, a federal judge in Florida granted Trump’s request for the court to appoint a special master to go over materials the FBI seized in its Mar-a-Lago search.