FILE PHOTO: The Truth social network logo is seen displayed behind a woman holding a smartphone in this picture illustration taken February 21, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
(Reuters) -The U.S. Securities and Exchange Commission on Thursday cleared the way for blank-check acquisition company Digital World Acquisition Corp's merger with former U.S. President Donald Trump's media and technology company.
Digital World said a registration statement for its proposed merger with Trump Media & Technology Group (TMTG), the operator of social media platform Truth Social, was declared effective by the SEC.
The closing of the deal would be a major boost for Trump, who will hold a stake of about 58% in the newly-formed company.
DWAC shares soared nearly 30% on Thursday morning, and were last trading up 20% at $52.16, having touched a session high of $56.30. Shares of video-sharing platform Rumble, which is popular with conservatives, rose nearly 11%, while software developer Phunware, hired by Trump's 2020 presidential re-election campaign to build a phone app, rose 1%.
Phunware was one of the most traded stocks across all major U.S. exchanges.
Digital World said it expects to announce the date of a special meeting of its stockholders to vote on the approval of the merger within two business days. Representatives for DWAC did not immediately respond to a request for comment.
The stock has surged more than 150% since Jan. 15, when Trump won the Iowa caucus in his push as a Republican nominee for this year's presidential election.
TMTG’s founders launched the company as a way for Trump to connect with his followers after he was cut off from major social media platforms following the Jan. 6, 2021, attack on the U.S. Capitol by his supporters.
Trump, who is frontrunner for the Republican party’s presidential nomination, has 6.61 million followers on Truth Social, compared to the more than 88 million followers he had on Twitter when the platform permanently suspended him, and the 87.4 million followers he currently has on that platform, now called X.
On Nov. 19 the San Francisco-based app reversed its position under billionaire Elon Musk, the self-proclaimed “free speech absolutist” who bought Twitter on Oct. 2.
Digital World has faced several challenges since its October 2021 deal with TMTG. It has been the target of investigations by the U.S. Department of Justice and the SEC, ousted its chief executive, and shook up its board.
Those investigations have contributed to the deal’s delay. In July 2023 DWAC reached an $18 million settlement with the SEC, which had charged DWAC with making material misrepresentations in filings to the SEC as part of DWAC’s initial public offering and proposed merger with TMTG.
The SEC found DWAC misled investors and the SEC by failing to disclose that it had formulated a plan to acquire and was pursuing the acquisition of TMTG prior to DWAC’s initial public offering, in violation of federal securities laws.
In August, Trump broke a pledge to stick exclusively with Truth Social, and posted on X his mug shot from his booking at Fulton County Jail in Georgia. He has not posted on X since, using Truth Social as his primary platform to reach voters.
(Reporting by Sruthi Shankar in Bengaluru and Helen Coster in New York; Editing by Sriraj Kalluvila, Anirban Sen and Daniel Wallis)
