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Truth Social parent Trump Media’s merger with DWAC officially delayed

This stock photo shows the logo of Donald Trump’s new social media app Truth Social on a smartphone in Los Angeles, Feb. 21, 2022.

Chris Delmas | AFP | Getty Images

Digital World Acquisition Corp., the blank check company that plans to take Trump Media and Technology Group and its Truth Social platform public, said Tuesday that shareholders voted to approve an extension of the deadline to merge with the former president’s firm.

Shares in the special buyout company rose more than 5% after a brief shareholder meeting announcing the delay.

The company, which already has $1 billion in funding already at risk, had delayed the meeting several times in recent months as it worked to win shareholder support. DWAC needed 65% of shareholders to approve an extension of the deadline to merge with Trump Media until September 2023.

DWAC has previously failed to obtain the necessary votes from its large number of retail investors. The meeting was adjourned several times. DWAC CEO Patrick Orlando initiated a built-in expansion with a $2.8 million contribution from his company Arc Global Investments II. DWAC faces liquidation next month if it cannot get a merger extension. The Securities and Exchange Commission is investigating the Trump Media-DWAC deal.

“It’s a very demanding process when you have as many shareholders as we did,” Orlando said during an interview with IPO Edge on Tuesday just before the shareholder meeting.

Orlando has been working to drum up votes on Trump Media’s Truth Social platform, even calling on Trump Media CEO Devin Nunes and its chairman, former President Donald Trump, to help publicize the effort.

The stakes of the vote were particularly high for some of the former president’s supporters, who shared on Truth Social and Reddit that they have invested thousands of dollars in DWAC in a nod to support the platform.

If a merger were to take place, it would provide hundreds of millions of dollars in funding to Trump Media. It has already faced a number of legal and financial hurdles. The deal has been the subject of a criminal investigation and the delay has resulted in a loss of over $100 million in investments.

The former president previously said he might take the company private. Internal documents have shown that Trump Media was also considering mergers and partnerships with other right-wing platforms, including Rumble and Parler.

Over the weekend, Elon Musk, the new owner of Twitter, reinstated Trump on the social media platform. Twitter banned Trump in the wake of the January 6, 2021 riot at the US Capitol, where hundreds of his supporters rioted and disrupted lawmakers formally counting Electoral College votes. The former president has yet to tweet since being reinstated.

“I expect truth [Social] to be the main platform for the president’s tweets, or, his truths,” Orlando said during the fire chat Tuesday. “At Digital World, we don’t actually control anything related to Truth and its users at this time. But we’re looking at it, and we really like what we’re seeing with user engagement.”

The special-purpose acquisition vehicle has also dealt with the fallout from a Trump Media executive’s whistleblower complaint to federal regulators. William Wilkerson, a senior vice president at Trump Media, had filed a whistleblower complaint alleging securities violations in August. Wilkerson has described himself as one of the company’s founders and said he no longer believes in its viability.

In September, the company said it lost $138.5 million of $1 billion in financing from private investors in public equity, also known as PIPE, to fund the merger. That same month, DWAC changed its mailing address to a UPS Store in Miami.

In recent days, DWAC lost one of its board members when Justin Shaner, CEO of Shaner Properties in South Florida, resigned, according to a securities filing.

—CNBC’s Jack Stebbins contributed to this article.

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