Digital World Acquisition Corp. (NASDAQ:DWAC), the Special Purpose Acquisition Company (SPAC) that was supposed to take the Trump Media & Technology Group (TMTG) public via a reverse merger, was already reeling from a cascade of negative developments surrounding the former US president Trump and his newly launched social media platform, Truth Social. Against this relatively morose backdrop, the SPAC’s shareholders are now likely to have delivered a potent setback to the former president’s dreams of carving out a media empire in his image. As a refresher, the reverse merger with Digital World Acquisition Corp. would have furnished TMTG with $293 million in cash proceeds. Moreover, the SPAC had also managed to raise nearly $1 billion in PIPE investments. TMTG intended to use these copious cash resources to build a conservative-oriented media machine, which included plans to bolster Trump’s newly-launched Truth Social platform, launch a subscription-based, “non-woke” video-on-demand service, and initiate cloud-based offerings under the “tech stack” suite of products.
Disgraceful If you think markets are efficient, the majority of $DWAC shareholders prefer $10.00 over $25.00https://t.co/ycj6X6sIR0 — Julian Klymochko.eth (@JulianKlymochko) September 6, 2022 However, all of these elaborate plans have been jeopardized now by the inaction of Digital World Acquisition Corp. shareholders. To wit, the shareholders were required to approve a 1-year extension in the deadline by which the SPAC and TMTG were mandated to consummate their merger agreement. However, as per the reporting by Reuters, the proportion of shareholders that have approved the deadline extension is likely to fall short of the requisite 65 percent threshold, with DWAC executives privately expressing apprehension about this low turnout. The result of this online voting will be announced by DWAC in a special meeting on Tuesday morning. At the heart of this debacle lies spectacular mismanagement and the management’s failure to effectively communicate the underlying urgency to Digital World Acquisition Corp. shareholders. Bear in mind that if the extension proposal fails, the deal will fall apart, tanking Trump’s media-related ambitions with it. Of course, Digital World Acquisition Corp. executives might still be able to salvage the deal by extending the voting deadline, thereby hoping to garner enough votes to push through the proposal that would extend the time by which DWAC and TMTG would be required, as per the terms of the agreement, to consummate their merger. Meanwhile, Digital World Acquisition Corp. shares continue to suffer from a litany of adverse developments related to Truth Social. Firstly, the SPAC is under investigation by the SEC and FINRA for allegedly violating securities law by holding private discussions about a merger with TMTG as early as May 2021 but failing to disclose this pertinent information in its public filings. In fact, the ongoing investigations by the SEC is a major reason why DWAC and TMTG are delaying the consummation of their merger agreement. The SEC is also looking into reports that Rocket One Capital might have been privy to the impending merger between TMTG and DWAC before the public announcement.
— Charles Gasparino (@CGasparino) August 25, 2022 Moreover, Fox Business’ Charles Gasparino reported back in August that Truth Social stopped paying web hosting service providers a few months back, leading to the accumulation of $1.6 million in payables. Finally, Google has apparently withheld the listing of the Truth Social app on the Play Store, citing lacunas in its content moderation policies. Do you think Digital World Acquisition Corp. and TMTG would be able to move ahead with their merger agreement? Let us know your thoughts in the comments section below.
Update: Digital World Acquisition Corp. Has Extended the Voting Period
In a last-ditch effort to salvage the merger agreement, Digital World Acquisition Corp. has now extended the voting window on the merger deadline extension proposal to the 08th of September. This delay might just allow at least 65 percent of the shareholders of record to approve the crucial proposal, thereby saving the merger agreement from collapsing.
