One of the most talked about SPAC mergers of all time saw shares surge in valuation and demand and brought interest back to the SPAC market. A filing shows some provisions for the SPAC merger based on its well-known namesake leader.
What Happened: Trump Media & Technology Group announced a merger with Digital World Acquisition Corp DWAC in a deal valuing the new company at up to $1.7 billion.
The company is the parent of TRUTH Social, a social media platform taking on Twitter Inc TWTR and Meta Platforms META owned Facebook.
Trump Media & Technology Group also plans to take on Netflix Inc NFLX, the Walt Disney Co DIS, CNN and iHeartMedia IHRT with media and streaming offerings in the future.
The company is led by former President Donald Trump.
A filing from the company shared some interesting provisions based on its leader.
Related Link: 7 Key Takeaways From The Donald Trump SPAC Deal
New Information: The SPAC merger filing said that a “material disruptive event” will not change the company’s ownership.
“The company principal’s ownership and position in the company shall be structured in such a way as to eliminate the need for restructuring of ownership or changes in position were a material disruptive event to occur,” the filing reads.
A material disruptive event is listed to include “the company principal announces that he is running for a public office” or “the company principal is personally convicted of a felony criminal offense.”
The wording is significant as it says that Trump will still lead the company if he runs for president in 2024 or is convicted of a felony.
The new filing also clarified how much the stock needs to trade at for the full $1.7 billion valuation to hit.
Earn-outs are listed at prices of $15, $20 and $30 for DWAC shares. The additional shares are 15 million shares based on a $15 share price, 15 million based on a $20 share price and 10 million based on a $30 share price. The potential earn-outs total $825 million.
The lock up on shares is six months after the merger closing or 150 days if the stock price is above $12. Given the stock price, the lock up could hit the latter level and occur in closer to five months' time.
DWAC Price Action: DWAC shares are trading around $30 Wednesday versus a 52-week range of $22 to $101.87.
Original publication: 2021-10-27
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