Trump Media’s Merger Faces Critical Deadline

A merger between former President Donald Trump’s media start-up and Digital World Acquisition faces a potential catastrophic outcome if it fails to close the approaching September 8 deadline. Digital World, a special purpose acquisition company (SPAC), plans to hold a shareholder vote to extend the deadline another year. However, if the vote fails, Digital World will be required law to refund the $300 million it raised from investors, leaving Trump’s company with nothing. The merger has faced numerous challenges, including allegations of starting discussions with Trump Media before permitted under SPAC rules, the termination of its CEO, an insider trading scandal involving a former board member, and an $18 million settlement for misleading investors and providing false information to the Securities and Exchange Commission.

According to finance professor Jay Ritter, the difficulty in extending the deadline indefinitely suggests that the deal could be running out of time. Digital World’s shareholder base mostly consists of small-time retail investors who may not be closely following the liquidation deadline. To secure the extension, Digital World needs 65% of its shareholders to vote in favor of the deadline extension.

The Securities and Exchange Commission (SEC) has declined to comment on the matter, but it previously investigated Digital World and found that it had made material misrepresentations to investors. Trump Media has blamed the SEC for the merger’s troubles, accusing the agency of sabotaging the deal for political reasons. However, the SEC has stringent disclosure requirements and closing conditions for SPAC mergers.

Overall, the fate of the merger between Trump Media and Digital World Acquisition hangs in the balance as the critical deadline approaches. The outcome will determine whether Trump’s media start-up can materialize into the tech titan it claimed to be or face a significant financial setback.

Sources:
– The Washington Post