Trump Media’s merger deal at risk of collapsing
Digital World stalls 2 more days to gather votes to extend completion deadline
NEW YORK — The future of former President Donald Trump’s social media platform remains in doubt after a cashrich company that it had hoped to merge with announced Tuesday that it needed a couple of more days to get shareholder support to extend the deadline for completing the deal.
Digital World Acquisition had scheduled a meeting Tuesday to announce the outcome of the shareholder vote to extend the deadline for completing the merger by another year. But moments after the meeting started, Patrick Orlando, Digital World’s CEO, announced that he was adjourning the meeting to Thursday to allow more time for investors to vote.
If the special purpose acquisition company, or SPAC, cannot get 65% of shareholders to approve the extension, it will be forced to liquidate and return to shareholders the nearly $300 million it raised in an initial public offering in September.
The liquidation will also mean that some three dozen hedge funds that had committed to providing $1 billion in additional financing will not have to come up with that cash.
The potential collapse of the deal raises questions about the future of Trump Media & Technology Group and its flagship social media app, Truth Social, the Twitter-like platform that Trump backed after Twitter barred him from posting after the Jan. 6, 2021, attack on the U.S. Capitol.
Digital World, which went public a year ago, had given itself until Thursday to complete a merger with another company. Dual investigations into the deal by federal prosecutors and securities regulators have bogged down the merger and led to the delay.
Without the cash infusion from Digital World, Trump Media may need to raise additional financing or find another merger partner.
Over the weekend, Trump, in a post on Truth Social, suggested that he’d be all right if the deal with Digital World failed: “I don’t need financing, ‘I’m really rich!’ Private company anyone???”
In the run-up to the special meeting, Digital World embarked on an aggressive campaign to get out the votes, with a special appeal to the many retail investors who bought shares after the IPO to show support for the former president.
To date, Trump Media has raised about $37 million in financing from unnamed investors, including $15 million this year. But it is unclear how much money Trump Media has been spending to operate Truth Social since it started in February.
The social media site has grown slowly. Truth Social ranks 124th among apps downloaded by iPhone users, according to data tracking firm SensorTower.
Meanwhile, one of Trump Media’s main business partners, Rumble, is moving closer to completing its own merger with a SPAC. On Sept. 15, CF Acquisition Corp. VI is set to announce whether its shareholders have approved a merger with Rumble, an online video platform that offers a conservative alternative to YouTube.