Trump Media has until September 8 to either finalize a merger with Digital World Acquisition or win a shareholder vote, or the bid to take the company public will collapse.
Topline
The parent company of Truth Social—former President Donald Trump’s alternative to Twitter—is facing a critical shareholder vote this week that could decide whether Trump’s media startup goes public, after over a year of delays and scrutiny from regulators.Key Facts
The long-stalled merger of Trump Media & Technology Group and Miami-based special-purpose acquisition company Digital World Acquisition must either close or extend its deadline before September 8, or Digital World will be required to liquidate and return the $300 million it raised to its shareholders—and Trump Media won’t go public.
At least 65% of Digital World’s 400,000 shareholders must cast their votes by September 8 to decide if they’ll extend the deadline for another year, which they’ve already done once, or let the merger expire and see the blank-check company—which closed at $16.51 a share Friday—return just $10.24 per share to investors (a shareholder meeting is scheduled for Tuesday but Digital World can delay the final tally until Friday).
Deadline extension votes in the SPAC sphere are usually approved, and Digital World has proved to be no exception—if this vote passes, it will be the fifth extension on the Trump Media deal, according to Bloomberg.
If Digital World is forced to liquidate, Trump Media would have gotten nothing out of the proposed merger, but the future of Trump Media or Truth Social is unclear—Trump owns a 90% stake in the company, which the reported he would keep if the deal falls through.
Law professor Usha Rodrigues told Bloomberg the biggest problem for the extension vote could be that Digital World shareholders “are not paying attention”—many shareholders are small-time retail investors, some of whom likely bought shares out of loyalty to Trump, and may not know the deal is on the line.
