Donald Trump‘s media company, Trump Media & Technology Group (TMTG), announced a SPAC merger with Digital World Acquisition Corporation DWAC in October 2021.
Since then, the deal has faced multiple setbacks and a new wrinkle could further delay the transaction.
What Happened: On Thursday, shares of the SPAC fell with news circulating that Trump has now been slapped with yet another lawsuit.
This time, the co-founders of TMTG — the parent company of Truth Social — are accusing the quadruple-indicted former president of “drastically” diluting the value of their stock shares and potentially diminishing their profits.
Trump Media & Technology co-founders Andy Litinsky and Wes Moss allege that Trump and others kept them from getting a stake that would have been worth hundreds of millions of dollars, according to the Washington Post.
Moss and Litinsky met Trump when they were contestants on the reality show "The Apprentice."
The pitch for a Trump-owned media company and social network came about after the former president was banned from Twitter, now known as X, in January 2021 — just days after his supporters violently stormed the Capitol.
The co-founders’ partnership, United Atlantic Ventures, was given an 8.6% stake in the company when it launched. Trump got 90%.
Litinsky and Moss eventually left the media company, but their partnership retains a stake in the company.
According to the lawsuit, Trump and others are offering additional shares as part of the merger, thereby diluting Litinsky and Moss’s shares and taking UAV's stake down to just 1%.
Attorney Christopher J. Clark, who is representing the two co-founders, told the Washington Post his clients were "promised 8.6 percent of this company and sadly its business partners are baselessly trying to renege."
"They feel like: We made Truth Social for you. You get 90 percent,” Clark said. “But some people just aren't happy with 90 percent."
Related Link: Trump To Maintain Control Of Media Company If He Sells Majority, Goes To Jail Or Becomes President
Why It's Important: According to the report, a recent filing from Digital World Acquisition acknowledged the issues with UAV and said that a lawsuit could delay the merger.
Clark is a high-profile attorney, who has previously represented Elon Musk, Mark Cuban and Hunter Biden.
The news of the lawsuit comes as Digital World Acquisition recently received a registration statement on Form S-4 from the U.S. Securities and Exchange Commission (SEC), which clears the path for the merger to go through.
The new lawsuit could delay the merger, which faces a March 8, 2024 deadline. The company has extended its deadline multiple times due to regulatory scrutiny and the failure of management to convince shareholders to vote in favor of a union.
A delay in the merger could also impact Trump’s finances. He’s currently on the hook for over $450 million in fines and legal fees related to multiple trials. But his stake in TMTG could be worth more than $3 billion.
DWAC Price Action: Digital World Acquisition shares are down 8.86% to $41.16 on Thursday versus a 52-week trading range of $12.34 to $58.72.
Image: Shutterstock
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
