Big investors are starting to eye the exits on the $1.3 billion bid to take former President Donald Trump’s new social media startup public, Politico reports.
The hedge funds, trading firms and other major backers are questioning whether the financial riches that first attracted them to the transaction are still strong enough to hold their interest in a deal fraught with troubles, according to four investors who asked not to be named. Negotiations have been ongoing as some investors seek bigger potential profits in exchange for following through on commitments to put hundreds of millions of dollars into the venture.
There are no guarantees investors will get what they are pushing for as little headway has been made ahead of a Monday deadline. Digital World Acquisition shareholders are scheduled to vote next Monday on extending the SPAC’s merger deadline until September 2023.
The group of more than three dozen investors who had planned to put $1 billion into the company have begun to waver as bad news keeps piling up around the deal, including a Securities and Exchange Commission investigation, a lawsuit by a scorned business partner against Digital World and reports that the Trump social network at the heart of the planned operation is struggling to pay its bills. Already, investors who had promised $138 million in capital have pulled out, with the SEC yet to OK the public offering nearly a year after its announcement.
Meanwhile, shares of Digital World fell more than 2% on Tuesday, following reports that Elon Musk had offered to close his deal with Twitter, the chief competitor to Trump’s social media platform. Read more.
