Trump Media's Wall Street Merger Faces Termination Twist

The highly anticipated merger between Truth Social and the Trump media empire, previously shrouded in controversy and delays, has taken an unexpected turn. A recent regulatory filing revealed that both parties involved in the deal have the option to terminate the merger between October 31 and November 21.

Digital World Acquisition Company, the entity striving for two years to acquire Trump Media & Technology Group, can terminate the merger if, after conducting updated due diligence, its board of directors no longer deems it in the best interest of the firm or its shareholders.

Similarly, Trump Media holds the right to terminate the deal for the same reasons within the specified time frame.

The reasons behind the addition of this new termination language to the merger agreement were not provided in the filing. Digital World’s shares experienced a 4% decline on Monday in response to the news.

Digital World is a special purpose acquisition corporation (SPAC), established with the sole purpose of taking a private company public. The company targeted Trump Media in the fall of 2021. However, the merger proposal has been marred by legal scrutiny and controversy. In June, federal prosecutors filed insider trading charges against three investors, alleging they profited over $22 million through illegal trading based on nonpublic knowledge of the secret merger plan.

In July, Digital World settled charges with the Securities and Exchange Commission (SEC), which claimed the company violated anti-fraud laws by failing to disclose its active pursuit of a deal with Trump Media before the news became public.

Former President Donald Trump himself has faced significant legal challenges since the SPAC deal was initially announced, including multiple indictments. The revised merger agreement was revealed on Monday, coinciding with the first day of the civil fraud trial involving Trump, his eldest sons, their companies, and Trump Organization executives.

Matthew Tuttle, CEO of Tuttle Capital Management, expressed skepticism about the significance of the new termination clause. However, given the tumultuous history of this deal, he did not rule out the possibility of either party taking advantage of it. Tuttle also noted that Trump’s ongoing legal issues could complicate matters, despite investors betting on the deal’s successful completion based on Digital World’s stock performance.