new york
CNN
—
There’s a new twist in the long-delayed and controversial deal that brought Truth Social and the Trump media empire to Wall Street, and the merger could be called off by either party.
Under the updated merger agreement, both parties to the deal will have an opportunity to terminate the merger between Oct. 31 and Nov. 21, according to a regulatory filing Monday.
Digital World Acquisition Company, which has been trying to acquire Trump Media and Technology Group for two years, said “After the most recent due diligence, the board believes it is in the best interest of the company and its companies.” If we are no longer able to do so, we may terminate the transaction.” shareholders,” the filing states.
Similarly, Trump Media could terminate its contract within the same period for the same reasons.
The parties did not explain why the new termination language was added to the merger agreement. Digital World stock fell 4% on Monday.
Digital World is a special purpose acquisition corporation (SPAC) that exists for the sole purpose of taking a private company public. So-called blank check companies targeted Trump Media in fall 2021.
But the proposed in-house marriage is clouded by legal scrutiny and controversy. In June, federal prosecutors indicted three investors on insider trading charges, alleging they made more than $22 million by illegally trading privately in a secret merger plan.
In July, Digital World was sued by the Securities and Exchange Commission, which said the company violated fraud laws by not disclosing that it was actively pursuing a deal with Trump Media before the news became public. settled the charges.
Donald Trump himself has faced serious legal troubles, including multiple indictments, since the SPAC deal was first announced. The amended merger agreement was announced Monday, with Trump in court for the first day of a civil fraud trial against the former president, his eldest son, his company and Trump Organization executives.
Matthew Kennedy, senior IPO market strategist at Renaissance Capital, which provides IPO promotion research, said, “It would be an understatement to say that legally considering dissolution in this way increases the likelihood that the merger will be canceled.” Not,” he said. “This deal has been stalled for almost two years. It’s a big part of TMTG’s existence…The longer this goes on, the more limited TMTG’s options as a company become.”
But Kennedy noted that both Digital World and Trump Media reaffirmed their commitment to making the merger happen in Monday’s press releases.
Trump Media CEO Devin Nunes said in a statement that the company remains “focused on closing this transaction as quickly as possible.”
Matthew Tuttle, CEO of Tuttle Capital Management, said he doesn’t think the new termination agreement will be that significant.
“But this deal is so confusing that we can’t rule out either side taking advantage of it,” Tuttle said. The company issues exchange-traded funds (ETFs), including one focused on the SPAC market. “I don’t think the current legal issues affecting Mr. Trump’s company will be an issue.”
Tuttle noted that based on where Digital World stocks are trading, investors are “betting that the deal will go through.”