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DWAC stock spikes after merger with Trump's Truth Social parent gets delayed

After months of wrangling, Digital World Acquisition (DWAC) shareholders finally extended the company's deadline to merge their blank check company with former President Trump's media company on Tuesday.

The move to delay the union between the two companies needed 65% of shareholder approval and that was finally accomplished Tuesday after months of lobbying from DWAC CEO Patrick Orlando.

The company now has some much needed breathing room, as the vote gave the DWAC Board of Directors the power, without another proxy vote, to delay any merger itself until Sept. 8 2023.

DWAC stock shot up immediately on the news.

The announcement, which Orlando delivered in a shareholder meeting Tuesday, comes just days after twin events raised market interest in the company and its troubled effort to combine with the Trump Media & Technology Group (TMTG).

First, Trump announced he was running for president again, and then on Saturday, his Twitter account was reinstated following the results of a poll posted by new owner Elon Musk. The president had been permanently banned from the social media platform days after helping to incite a riot attack on Capitol Hill in January 2021.

Trump says he has no interest in returning to Twitter and will remain on his own company’s social media platform, Truth Social, but the temptation to return to Twitter — where he has close to 88 million followers compared to about 4.6 million on Truth Social — is high. If Trump reverses course and resumes tweeting, it could undermine the business model of his media company.

Asked about Musk's poll and decision to reinstate Trump during an Q&A before the meeting, Orlando said it was a sign "of how popular [Trump] is." In reference to the competitive landscape between Truth Social and Twitter, he said, "I think there is room for many competitors in that landscape."

A 13-month saga

Tuesday's news was just the latest chapter in DWAC's attempt to delay the merger. Shareholders had been asked to gather six times previously — on Sep. 6, Sept. 8 (three times), Oct. 10, and Nov. 3 — to vote on the merger only to have the meeting repeatedly delayed as Orlando scrambled to get 65% of shareholders to vote on approval of the plan to delay the merger into 2023.

During Tuesday's Q&A with IPO Edge ahead of Tuesday's announcement, Orlando also reflected on recent months saying, "It's a really arduous process when you have as many stockholders as we did," he said. "Retail stockholders often don't feel they need to participate," but that they had been diligently getting in touch with stockholders, often through an "old-school process" to get them to cast their vote, he added.

DWAC had previously said in a securities filing that a failure on this vote would mean it would likely "be forced to liquidate."

The company is still in the middle of an investigation by the Securities and Exchange Commission into whether Trump's company and DWAC illegally negotiated before it went public, putting the actual merger is on hold until the investigation is resolved.

Former U.S. President Donald Trump makes an announcement of his plans to run for president in the 2024 U.S. presidential election at his Mar-a-Lago estate in Palm Beach, Florida, U.S. November 15, 2022.  REUTERS/Octavio Jones
Former President Donald Trump makes an announcement of his plans to run for president in the 2024 at his Mar-a-Lago estate in Florida on November 15. (REUTERS/Octavio Jones)

In addition to his promises to keep his account on Truth Social, Trump has also suggested he is considering calling off the merger altogether and financing his media company himself, once writing in a post, "I don’t need financing, 'I’m really rich!' Private company anyone???"

DWAC first began selling stock more than 13 months ago with shareholders, many of whom are Trump's political supporters, seeing the stock trade bounce between highs of well over $100 per share and lows around $15 per share at other points. At one point, shares of DWAC jumped more than 800% amid a flurry of buying over two days as social media interest in the company peaked.

Ines is a senior markets reporter covering stocks. Follow her on Twitter at @ines_ferre.

Ben Werschkul is Washington correspondent for Yahoo Finance. Follow him on Twitter at @benwerschkul

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