Dive Brief:

• Digital World Acquisition (DWAC), the blank-check company planning to merge with an online media venture created by former President Donald Trump, extended for a third time the deadline for allowing shareholders to vote on the deal. The new deadline is Nov. 3. 
• If Digital World does not gain investor approval by Dec. 8 for a 12-month extension of its merger effort, it may need to shut down and reimburse investors with the nearly $300 million it raised last year in an initial public offering (IPO).
• “We continue to strongly believe that a stockholder vote to approve a one-year extension is important and in the best interests of our stockholders,” Digital World CEO Patrick Orlando said in a statement. “I believe we have some — if not the most — passionate and enthusiastic stockholders of any public company.”

Dive Insight:

Digital World, a special purpose acquisition company, went public in Sept. 2021. Its shares rocketed from less than $10 to as high as $175 in intraday trading after it announced a merger with Trump Media & Technology Group (TMTG) and the launch of a Trump-led social network in Oct. 2021. Company shares traded on Tuesday at around $15.90.

Digital World is seeking formal approval for the merger from the Securities and Exchange Commission (SEC) even as the agency investigates whether the company, before its IPO, engaged in illegal negotiations with Trump’s company on details of a merger. The Justice Department is pursuing a similar probe.

Digital World said in May in an S-4 registration statement with the SEC that it had received an SEC subpoena seeking documents and information about meetings of the company’s board, “communications with and the evaluation of potential targets, including TMTG” and communications related to TMTG. The agency also required the company to hand over “agreements with and payments made to certain advisors.”

TMTG rallied behind Digital World investors last month, criticizing the SEC for allegedly pursuing political aims and withholding approval of the merger.

"The SEC has needlessly delayed its review of our proposed merger, causing real and unnecessary financial harm to DWAC investors,” TMTG said in a statement.

“Despite its standard practice to provide comments within 30 days, the SEC has failed to give meaningful feedback on DWAC's registration statement for a stunning 115 days and counting,” Trump’s media company said. “In the interests of simple fairness, the SEC needs to set aside any improper political considerations and bring its review to a swift conclusion."

In line with SEC rules, Digital World described in its 259-page registration statement several potential post-merger risks to investors. The details on risks span 57 pages.

“President Trump is involved in numerous lawsuits and other matters that could damage his reputation, cause him to be distracted from the business or could force him to resign from TMTG’s board of directors,” according to Digital World.

Among several instances of litigation, Digital World flagged the U.S. House investigation of Trump’s role in the rioting at the U.S. Capitol on Jan. 6, 2021, by insurrectionists opposed to the results of the November 2020 presidential election.

Digital World noted that the district attorney in Fulton County, Georgia is investigating Trump’s alleged interference in the presidential election. It also acknowledged that a U.S. House committee is probing whether Trump destroyed and removed classified documents and White House records. The company did not mention a similar investigation by the Justice Department.

Digital World cautioned investors that “a number of companies that were associated with President Trump have filed for bankruptcy,” including the Trump Taj Mahal, Trump Plaza, Trump Castle and Plaza Hotel.

Also, “a number of companies that had license agreements with President Trump have failed,” Digital World said, citing Trump Shuttle, Trump University, Trump Vodka, Trump Mortgage, Trump Steaks and GoTrump.com, a travel site.

“There can be no assurances that TMTG will not also fail,” Digital World said in the statement, noting that after a merger Trump would control 57.8% of the voting power of the outstanding common stock.

The merger has planned to back Truth Social, a social media channel created by the former president.

Trump was banned from Facebook, Twitter and YouTube after the 2021 insurrection. The social media networks said Trump spread falsehoods about voting fraud during the 2020 presidential election.