Former President Donald Trump’s media company, Trump Media & Technology Group, has encountered a significant setback in its long-awaited merger with special-purpose acquisition company (SPAC) Digital World Acquisition.
In an attempt to expedite the delayed merger, Digital World has offered to pay $18 million to the Securities and Exchange Commission (SEC) to settle an investigation into its initial merger talks.
While this settlement could potentially unlock substantial funds for Trump’s media company, tensions between the parties involved may jeopardize the deal’s completion.
This article examines the details of the settlement, the implications for both companies, and the regulatory obstacles they still face.
The merger between Trump Media & Technology Group and Digital World Acquisition has been in limbo due to an ongoing SEC investigation.
Originally scheduled for completion last year, the merger has remained frozen, leading Digital World to request an extension of the deadline by another year, beyond the initial September 8 deadline.
In response, Trump Media expressed disagreement, asserting that it is only bound by the Merger Agreement until September 8, 2023. Despite this disagreement, Digital World is committed to working in good faith with Trump Media to resolve the issue and reach an agreement that aligns with the interests of its shareholders.
Failure to complete the merger by the stated deadline could result in Digital World liquidating and returning $300 million to its investors. Digital World Acquisition disclosed in an SEC filing that it had reached a preliminary agreement with the SEC regarding the investigation.
The settlement offer of $18 million, subject to SEC approval, aims to rectify the violations and clear the regulatory cloud looming over Digital World.
The company believes that the settlement will provide the necessary clarity and enable it to move forward with its objective of creating an alternative media platform.
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While the settlement may remove some uncertainty, it does not guarantee regulatory approval for the merger. New York University law professor Michael Ohlrogge highlighted the potential challenges that Digital World still faces.
In addition to addressing the disclosed antifraud violations, the company must satisfy the SEC’s concerns regarding disclosure issues.
Notably, the valuation discrepancy between Trump Media in the merger agreement (up to $1.7 billion) and Trump’s campaign finance filings (between $5 million and $25 million) needs to be clarified.
Furthermore, the company must address other loans and legal risks that may emerge, potentially leading to further delays or liability for the merged entity.
Trump Media & Technology Group has been eagerly awaiting the completion of the merger to secure the necessary funds to establish Truth Social, its social media platform.
The settlement offer provides a glimmer of hope for the company, which has been counting on the merger to unlock hundreds of millions of dollars.
However, the filing also hints at underlying tensions between the two companies that could undermine the deal’s success. Trump Media retains the right to terminate the merger agreement altogether, adding an additional layer of uncertainty to the situation.
The resolution of the SEC investigation and the subsequent regulatory approval will determine the fate of the merger and the future of Trump Media’s media aspirations.
The proposed settlement of $18 million by the financial partner of the media company aims to address the SEC investigation and remove regulatory uncertainties surrounding the merger.
However, it is important to note that the agreement does not guarantee regulatory approval and does not fully resolve the tensions between the parties involved.
The fate of the merger and the media company’s future aspirations depend on the successful resolution of the investigation and the satisfaction of additional regulatory concerns.
The path to completing the merger remains uncertain, and further obstacles, such as valuation discrepancies and potential legal risks, may still pose challenges to its realization.