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 (NASDAQ: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 (NYSE:TWTR) and Meta Platforms (NASDAQ:META) owned Facebook.
Trump Media & Technology Group also plans to take on Netflix Inc (NASDAQ:NFLX), the Walt Disney Co (NYSE:DIS), CNN and iHeartMedia (NASDAQ: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
