- Digital World Acquisition Corp. (NASDAQ:DWAC) finally filed its Form S-4
- Trump Media & Technology Group first announced a definitive agreement with DWAC last October
- DWAC stock is currently up more than 6%
Digital World Acquisition Corp. (NASDAQ:DWAC) is up more than 6% at the time of writing after the special purpose acquisition company (SPAC) finally filed its Form S-4. A company must file an S-4 to disclose any material information related to a merger or acquisition. DWAC and Trump Media & Technology Group (TMTG) entered into a definitive merger agreement last October. The merger is expected to close during the second half of this year.
TMTG is a social media and technology company. Truth Social, the company’s first product, operates as a social media platform that seeks to compete with Twitter (NYSE:TWTR).
Last month, short seller Kerrisdale Capital released a short report on DWAC, alleging that there is “significant risk” that the company does not have enough material information to submit an S4 to the U.S. Securities and Exchange Commission (SEC). Kerrisdale also stated that DWAC stock provides “textbook examples” of SPAC misconduct.
With the S4 filing now in the public record, let’s take a more detailed look at the form.
DWAC Stock: Digital World Files Form S-4
- Former President Donald Trump wants Truth Social to be a platform for those who have been censored by Big Tech.
- The merger will provide TMTG with $1.25 billion of net proceeds, assuming no redemptions by DWAC shareholders.
- A large portion of the S4 is dedicated to detailing risk factors.
- DWAC disclosed that it has “not obtained an opinion from an independent investment banking firm or another independent firm” on whether or not the merger is fair to shareholders.
- TMTG seeks to cancel “cancel culture.” Failure to do this may “adversely affect TMTG’s brand and business prospects.”
- For the year ended Dec. 31, TMTG had $18.7 million in cash and cash equivalents, while Digital World had $328,000.
- Digital World also had $293 million in cash and marketable securities held in trust accounts.
- During 2021, TMTG incurred a net loss of $59 million. Digital World reported a net loss of $1.3 million.
- TMTG pre-combination equity holders will hold the majority of voting rights post-SPAC merger.
- Pre-combination holders will also have the right to appoint the “majority of the directors” on the combined entity.
- Furthermore, DWAC shareholders will own about 23.7% of the “outstanding capital stock” of the combined entity. TMTG security holders will own 70.1% of the outstanding capital stock.
- As of Dec. 31, DWAC had paid $2.4 million of transaction costs. The company expects to pay an additional $9.9 million.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.