Truth Social parent Trump Media’s merger with DWAC officially postponed

This illustration photo shows the logo of Donald Trump’s new social media app Truth Social on a smartphone in Los Angeles, Feb. 21, 2022.

Chris Delmas | AFP | Getty Images

Digital World Acquisition Corp., the blank check company that plans to take Trump Media and Technology Group and its Truth Social platform public, said Tuesday that shareholders voted to extend the deadline to merge with the former president.

Shares of the special acquisition company rose more than 5% after a brief shareholder meeting announcing the postponement.

The company, which already has $1 billion in funding and is already at risk, had postponed the meeting several times in recent months to gain shareholder support. DWAC needed 65% of its shareholders to approve a deadline extension for the merger with Trump Media to September 2023.

DWAC has previously failed to get the necessary votes from its large group of retail investors. The meeting was adjourned several times. DWAC CEO Patrick Orlando initiated a built-in expansion with a $2.8 million contribution from his company Arc Global Investments II. DWAC faced liquidation next month if it can’t get a merger extension. The Securities and Exchange Commission is investigating the deal between Trump Media and DWAC.

“It’s a very difficult process when you have as many shareholders as we have,” Orlando said during an interview with IPO Edge on Tuesday, just before the shareholder meeting.

Orlando has been working to garner votes on Trump Media’s Truth Social platform, even urging Trump Media CEO Devin Nunes and its chairman, former President Donald Trump, to publicize the effort.

The stakes of the vote were particularly high for some of the former president’s supporters, who shared on Truth Social and Reddit that they had invested thousands of dollars in DWAC as a show of support for the platform.

If a merger happened, it would bring hundreds of millions of dollars in funding to Trump Media. It has already faced a series of legal and financial obstacles. The deal has been the subject of a criminal investigation and its delay has resulted in the loss of more than $100 million in investment.

The former president previously said he could take the company private. Internal documents show that Trump Media was also considering mergers and partnerships with other right-wing platforms, including Rumble and Parler.

Over the weekend, Elon Musk, the new owner of Twitter, reinstated Trump on the social media platform. Twitter banned Trump in the wake of the January 6, 2021 riot at the U.S. Capitol, where hundreds of his supporters rioted and disrupted lawmakers who were formally counting Electoral College votes. The former president has not tweeted since his reinstatement.

“I would expect the Truth [Social] to be the main platform for the president’s tweets, or his truths,” Orlando said during the fireplace chat Tuesday. “At Digital World, we don’t really have anything to do with Truth and its users at this point. But we’re keeping an eye on it, and we really like what we’re seeing with user engagement.”

The special purpose acquisition vehicle has also faced fallout from a Trump Media executive’s whistleblower complaint to federal regulators. William Wilkerson, a senior vice president at Trump Media, filed a whistleblower complaint in August alleging securities violations. Wilkerson has described himself as one of the founders of the company and said he no longer believes in its viability.

In September, the company said it lost $138.5 million of the $1 billion in funding from public equity private investors, known as PIPE, to fund the merger. That same month, DWAC changed its mailing address to a UPS store in Miami.

In recent days, DWAC lost one of its board members when Justin Shaner, CEO of South Florida-based Shaner Properties, stepped down, according to a securities filing.

– CNBC’s Jack Stebbins contributed to this article.

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