Company Seeking Merger With Trump Firm May Lose Over $138 Million Worth Of Investments

Digital World Acquisition, the company aiming to merge with Trump Media & Technology Group (TMTG), owned by former President Donald Trump, is set to lose millions of dollars’ worth of investment from institutional investors, according to the firm’s recent filing with the U.S. Securities and Exchange Commission (SEC).

In October last year, Digital World entered into a merger agreement with TMTG, the parent company of social media platform Truth Social. On Dec. 4, 2021, Digital World entered into securities purchase agreements (SPA) with certain institutional investors (PIPE), according to which the investors agreed to buy up to an aggregate of 1 million shares of Digital World at a purchase price of $1,000 per share—a commitment valued at $1 billion. The investment was to be consummated “concurrently with the Business Combination,” the filing said.

The PIPE investors would back out from the deal if it was not completed by Sept. 20, 2022. The deadline has passed, and Digital World and TMTG have yet to merge.

“Between September 19, 2022, and September 23, 2022, Digital World received termination notices from PIPE Investors representing approximately $138.5 million of the PIPE,” according to the filing.

Digital World’s share prices have fallen drastically this year. After peaking at around $110 in March, the company’s share is presently trading at around $18.81 as of Sept. 23—a decline of nearly 83 percent.

Over the last month, the share value has dropped by around 44 percent.

‘Inexcusable Obstruction’

The proposed merger between Digital World and TMTG is facing challenges due to multiple investigations from federal regulators.

In late October and early November, the Financial Industry Regulatory Authority (FINRA) asked Digital World for a review of trading activities prior to the merger announcement.

An analysis by Reuters reported unusual trading activity on Oct. 20 just before the deal was announced