After facing a series of regulatory obstacles, the shell company attempting to take over former President Donald Trump’s social media platform needs to extend a looming deadline to complete the controversial deal.
Digital World Acquisition Corp., a special purpose acquisition company (SPAC), disclosed late Friday it is seeking shareholder approval to delay the September 8 deadline by a year to allow time to consummate its planned acquisition of Truth Social owner Trump Media & Technology Group.
Shares of the blank-check company fell 3% Monday morning. Truth Social, which had a messy launch earlier this year, aims to be an alternative to traditional social media and has promised to “stand up to the tyranny of Big Tech.”
In late June, Digital World, revealed its board members have received subpoenas from a federal grand jury in the Southern District of New York related to due diligence regarding the deal. Both the Justice Department and Securities and Exchange Commission are investigating the transaction.
“While we are using our best efforts to complete the business combination as soon as practicable, our board of directors believes there will not be sufficient time before the termination date,” Digital World said in the new filing.
That’s why Digital World is asking shareholders to extend the deadline until September 8, 2023. Without the extension, the shell company said it may be “forced to liquidate” without a deal in hand.
The DOJ and SEC investigations have served as major roadblocks to getting the deal consummated, according to the filing.
“We have experienced a number of regulatory delays, and we and TMTG may continue to experience additional delays in the future,” Digital World said in the filing. “These delays could cause us to be unable to consummate the business combination.”
The filing indicates the regulatory headwinds facing the Trump deal are “formidable” and “really hits home the possibility that the deal is terminated due to regulatory headwinds,” said Matthew Kennedy, senior IPO market strategist at Renaissance Capital.
“The SEC and DOJ are not known for moving fast or trying to speed things along to help the SPAC,” Kennedy said. “In some cases, indefinite delays can increase the likelihood that the deal is essentially terminated.”