Shares of Digital World Acquisition Corporation fell more than 20% Tuesday morning after it reportedly failed to get enough shareholder votes to extend the deadline for its merger with Trump Media and Technology Group.
The special purpose acquisition company had a Sept. 8 deadline to take former President Trump’s media company and its Truth Social platform public. The SPAC has previously warned that a failure to extend the merger deadline could force DWAC to liquidate.
Reuters reported that DWAC failed the secure enough shareholder votes for the one-year extension to complete the deal, citing people familiar with the matter. The vote would have extended the Sept. 8 deadline by a year.
The merger would give Trump’s company a cash infusion. Trump created Truth Social after he was banned from Twitter following the Jan. 6, 2021 Capitol riot.
DWAC warned investors that Trump’s volatile popularity could be a risk to the deal. The former president is also currently at the subject of various investigations, including a probe into the removal of sensitive documents from the White House. Both DWAC and Trump Media are also under federal investigation for possible securities violations.
DWAC needed 65% of shareholders to approve the extension. CEO Patrick Orlando says he controls 20% of shares through his ARC Investments but that many of the SPAC’s shareholders are retail investors.
Orlando has been on a media campaign and posting on Truth Social to drum up enough votes for the extension. DWAC is still trading above its liquidation price, which would pay out around $10 per share. There could be hope in “built in” extensions that Orlando has previously alluded to. Such an extension would require sponsors to add more cash to the company’s trust.
The vote results have not yet been announced by DWAC. A special shareholder meeting is scheduled for Tuesday at noon.