Trump’s Truth Social buyer gets more time to finalize merger

Shareholders of a cash-rich front company on Tuesday approved a move that will give the company an additional 12 months to finalize its long-delayed merger with former President Donald J. Trump’s social media company.

The shareholder vote increases the likelihood that Trump Media & Technology Group will have access to at least $300 million in much-needed cash to operate Truth Social, a right-wing social media platform.

Truth Social has become Mr. Trump’s main mouthpiece for attacking his political opponents, as well as federal and state prosecutors who have brought four indictments against him. Online advertisements on the social media platform are also a vital part of Mr. Trump’s fundraising efforts for his 2024 presidential campaign.

The shell company, Digital World Acquisition Corporation, raised the $300 million in an IPO in September 2021. Just over a month later, the company, created as a special, or SPAC, announced a merger agreement with Trump Media.

If Digital World shareholders had not approved the extension, the company would have had to return to shareholders the money raised during its initial public offering on Friday.

A SPAC raises money from investors in an IPO in hopes of finding a private company to acquire. Federal securities laws require SPACs to liquidate and return their cash to shareholders if a transaction cannot be completed within a specified time frame — often two years.

The merger was announced while Truth Social was still in the planning stages and Mr Trump was banned from posting on most social media platforms after violent protests at the US Capitol on January 6, 2021.

The deal had been delayed by a regulatory probe into allegations that Digital World misled investors about negotiations it had with Trump Media ahead of its September IPO, which is prohibited by securities laws. securities. Federal prosecutors also opened an investigation into allegations of insider trading in Digital World stock ahead of the merger announcement in October 2021.

In July, Digital World reached an agreement with the Securities and Exchange Commission that required it to review certain regulatory documents and pay an $18 million penalty if the merger was completed. Federal prosecutors have charged three men, including a former Digital World executive, with participating in a $22 million insider trading scheme.

As regulatory settlement neared, Digital World ousted its original chief executive and main promoter, Patrick Orlando, and reorganized its board of directors. Mr. Orlando, however, remains a significant shareholder in Digital World.

Digital World has been pushing for shareholders – most of whom are retail investors – to approve the move to give the company more time to complete the merger. She hired a consultancy to encourage 65 percent of the company’s shareholders to vote in favor of the extension.

Trump Media also lent its support to the vote for the vote, sending email alerts to Truth Social subscribers urging them to vote for the extension if they were also Digital World shareholders.

“Thank you for all of your outstanding support,” Eric Swider, chief executive of Digital World, told Truth Social shortly after the results of the extension vote were announced. “Please understand my silence. We stay focused on the task at hand and watch every word we say.

Chad Nedohin, a Digital World investor who has been a strong supporter of the merger, credited SPAC shareholders with securing approval for the extension, calling them “truly impressive campaigners.” Mr. Nedohin hosts a weekly video show called “DWAC’D” on Rumble, a conservative streaming media site that is a business partner of Trump Media.

The merger still faces obstacles.

In early August, Trump Media recommitted to closing the deal only after receiving new terms that would tighten Mr. Trump’s control over the combined company. The revised agreement with Trump Media calls for the merger to be finalized by the end of December. Mr. Trump’s company can also terminate the agreement before then, if Digital World cannot meet the Oct. 9 deadline to submit amended regulatory filings.

If the deal goes through, Mr. Trump will become the largest shareholder in the newly merged company, owning up to 70 million shares, according to a regulatory filing.

Shares of Digital World surged after the company announced the voting results, closing up 3.6 percent. With a market valuation well over $600 million, post-merger Trump Media would be one of Mr. Trump’s most valuable holdings.