Trump media deal suffers blow as SPAC fails to win extension from shareholders amid criminal probes

The blank-check acquisition firm that agreed to merge with former US president Donald Trump’s social media company failed on Tuesday to secure enough shareholder support for a one-year extension to complete the deal.

At stake is a US$1.3 billion cash infusion that Trump Media & Technology Group (TMTG), which operates the Truth Social app, stands to receive from Digital World Acquisition Corp, the special purpose acquisition company (SPAC) that inked a deal in October to take TMTG public.

The transaction has been on ice amid civil and criminal probes into the circumstances around the deal. Digital World had been hoping that the US Securities and Exchange Commission (SEC), which is reviewing its disclosures on the deal, would have given its blessing by now.

Digital World Chief Executive Patrick Orlando told a special meeting of his shareholders on Tuesday he would push back to noon on Thursday the deadline for the vote on extending the life of the SPAC by 12 months.

Digital World needs 65 per cent of its shareholders to vote in favour of the proposal, but the support as of late Monday fell far short, Reuters reported. Digital World did not disclose the margin on Tuesday.

Digital World shares ended trading in New York on Tuesday down 11.4 per cent at US$22.13.

Digital World is set to liquidate on Thursday and return the money raised in its September 2021 initial public offering to shareholders unless action is taken.

Digital World shareholders had been given more than two weeks to vote on the SPAC’s extension and it is unclear if two additional days will make a difference. Most Digital World shareholders are individuals and getting them to vote through their brokers has been challenging, Orlando said last week.