Some investors pull out of SPAC merger with Trump’s media company

The Truth social network logo can be seen on a smartphone in front of a display of former US President Donald Trump in this image, taken Feb. 21, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

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Sept. 23 (Reuters) – Some investors are pulling out of Digital World Acquisition Corp (DWAC.O)’s plan to acquire former US President Donald Trump’s social media company Truth Social, the blank-check company said Friday.

Digital World said it had received cancellation notices from private equity investment (PIPE) investors that ended nearly $139 million in investments from its previously announced $1 billion pledge.

Investors, who signed the PIPE commitment about a year ago, are free to move their funds after the September 20, 2022 deadline if the deal is not completed.

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Digital World has not disclosed which investors have pulled out. Sources told Reuters that Sabby Management, which pledged $100 million to the PIPE, is one of the investors who terminated the company.

Sabby Management declined to comment.

More investors could pull out in the coming weeks, sources said, as they could exit anytime after the deadline. Many are waiting for DWAC to propose more preferred terms to PIPE investors, sources added.

The deal between the special purpose company (SPAC) and Trump Media and Technology Group (TMTG), which owns Truth Social, has been shelved amid civil and criminal investigations into the circumstances surrounding the deal.

TMTG did not immediately respond to a request for comment.

The SPAC had hoped that the US Securities and Exchange Commission, which assesses Digital World’s disclosures about the deal, would have given its blessing by now.

Digital World said this month it would extend the duration of the deal by three months after its shareholder bid for a 12-month extension fell short.

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Reporting by Akash Sriram and Nivedita Balu in Bengaluru, Svea Herbst-Bayliss and Krystal Hu in New York; Editing by Maju Samuel and Josie Kao

Our Standards: The Thomson Reuters Trust Principles.

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