Shares of Digital World Acquisition dipped up to 7% today, extending a six-day decline to as much as 30% as the SPAC struggles to close its proposed merger with Trump Media & Technology Group.
Since Digital World announced the deal last year, its stock has plunged 90% from a record high of $175 per share. The most recent decline has been compounded by Digital World’s inability to close the merger with Trump’s company before its deadline this month. The SPAC has blamed federal investigations for the delay, while it scrambles to muster 65% of its voting stock to support a merger deadline extension to September 2023.
In a regulatory filing today, the SPAC included a statement by Truth Social, Trump’s social media platform, which is threatening a lawsuit against the SEC:
“The SEC has stalled its review of our planned merger with DWAC, having failed to act despite DWAC having filed its registration statement more than four months ago. This inexcusable obstruction, which directly contradicts the SEC’s stated mission, is damaging investors and many others who are simply following the rules and trying to expand a successful business. In light of the obvious conflicts of interest among SEC officials and clear indications of political bias, TMTG is now exploring legal action against the SEC. Despite the increasing weaponization and politicization of government agencies, Truth Social will continue its expansion plans, supported by the unprecedented levels of user engagement on the platform.”
Part of the SEC’s investigation is believed to be focused on unusually high trading volume in the SPAC’s warrants just before the deal with Trump’s company was announced. Federal regulators are also trying to determine whether the SPAC had deal conversations with Trump Media prior to its IPO. Such discussions would be illegal.
Adding to Digital World’s woe, the subscription agreement for a $1 billion PIPE to support the merger was set to expire yesterday. No word from the SPAC as of this afternoon on whether any of the PIPE investors have bailed out. Read more.
