Digital World, Trump's media firm add new termination clause to merger deal

(Reuters) — Digital World Acquisition (DWAC) and former US President Donald Trump's media company have added an option that allows them to terminate their merger deal between Oct. 31 and Nov. 21, a regulatory filing showed on Monday.

The move comes weeks after Digital World investors voted to give up to a one-year extension to complete the much-delayed deal. In October 2021, the special purpose acquisition company (SPAC) said it planned to take Trump's social media platform, Truth Social, public via the merger.

The blank-check firm amended the merger agreement on Sept. 29, according to the filing, which also disclosed that Digital World can terminate the agreement only in that three-week period in November.

Either of the two companies can decide to terminate the deal if their respective boards no longer believe the merger will benefit shareholders.

"The Third Amendment extends the period of time for the parties to complete mutual supplemental due diligence ahead of DWAC's anticipated filing of an updated registration statement on Form S-4 with the Securities and Exchange Commission," the companies said in a release dated Sept. 29.

Both firms did not immediately respond to Reuters' requests for comment.

Former US President and Republican presidential candidate Trump at the fall convention of the California Republican Party.

Digital World has faced a series of challenges since it stuck a merger deal with Trump Media & Technology Group (TMTG) on October 2021. It has been a target of investigations by the U.S. Department of Justice and the Securities and Exchange Commission (SEC).

If the merger closes, Trump Media would gain access to more than $1 billion in cash from DWAC's institutional investors, such as hedge funds. According to a Feb. 2, 2021 services agreement, Trump controls 90% of Trump Media.

(Reporting by Jaspreet Singh in Bengaluru; Editing by Anil D'Silva)