Trump-linked SPAC falls as the company gives shareholders more time to vote on extending a merger deadline with Truth Social

• Digital World Acquisition Corp. shares dropped sharply Tuesday as the SPAC linked to Donald Trump faces potential liquidation.
• Digital World shareholders gave shareholders two more days - until Thursday - to vote on extending a merger deadline with Trump's Truth Social media company.

Digital World Acquisition Corp. shares struggled with sharp losses Tuesday after the company gave its shareholders more time to vote on a proposal to extend a deadline to merge with Donald Trump's social media company.

The company extended the window for voting by two days, until Thursday, with Digital World's CEO Patrick Orlando announcing the move during a special meeting on Tuesday afternoon. A Reuters report earlier Tuesday said the company hadn't won enough votes from shareholders to give it another 12 months to complete a proposed deal with Trump Media & Technology Group, or TMTG.

Without enough shareholder support, the special purpose acquisition company is facing liquidation and would have to return money it had raised in its September 2021 initial public offering, Reuters reported.

"We are working diligently to record all votes that are continuing to come in from our stockholders and our adjourning this meeting to allow for additional time for stockholders to cast their votes," Orlando said at Tuesday's virtual meeting. TMTG runs the Truth Social networking app.

Digital World shares pared their losses to 7% shortly after the end of the brief meeting that began at 12 p.m. Eastern. The stock was later down by 16%, returning to levels seen just before the meeting began.

Digital World wants to extend a merger deadline by one year, to September 8, 2023. It needs 65% of shareholders to vote for the extension. By Monday evening, far fewer than that had voted in favor of the extension, sources had told Reuters. Digital World had previously said it may be forced to liquidate if a business combination didn't materialize.

The stock earlier Tuesday had lost as much as 21% at $19.70, the lowest price since October 2021, when the stock soared on Digital World's plans to merge with Trump Media & Technology Group. Shares of Digital World in 2022 have lost about 59%.

The Reuters report said at stake is a $1.3 billion cash infusion that Trump's company stands to receive from the SPAC if the deal is completed. If the deal were to be finalized, TMTG would receive $293 million from Digital World as well as $1 billion committed by investors in the form of a private investment in public equity, or PIPE.

In August, Digital World raised the prospect of delaying the merger plans, saying that Trump's business could be hurt by a potential decline in his popularity. Trump is the subject of investigations related to the 2020 election, the January 6, 2021, insurrection at the US Capitol, and his finances.

The FBI raided Trump's Mar-a-Lago resort residence in Palm Beach, Florida, in August as part of a Department of Justice probe into potential obstruction of justice and Espionage Act violations by Trump. On Monday, a federal judge in Florida granted Trump's request for the court to appoint a special master to go over materials the FBI seized in its Mar-a-Lago search.