Digital World Acquisition Corp.
| Company type | Public |
|---|---|
| Industry | Special-purpose acquisition company |
| Founded | 2021 |
| Founder | Patrick Orlando |
| Defunct | 2024 |
| Fate | Merged with Trump Media & Technology Group |
| Headquarters | United States |
Key people | Patrick Orlando (former CEO and Chairman) |
| Products | SPAC for merging with or acquiring private entities |
Digital World Acquisition Corp. (DWAC), established in 2021, was a United States-based special-purpose acquisition company (SPAC). As a shell corporation listed on a stock exchange, its purpose was to merge with or acquire a private entity, allowing that company to become publicly traded without undergoing the conventional initial public offering and the associated regulatory hurdles. The company was overseen by CEO and Chairman Patrick Orlando, who also founded and leads the investment advisory and banking firm Benessere Capital. In October 2021, DWAC revealed plans to merge with Trump Media & Technology Group (TMTG), the proprietor of Truth Social, a transaction that finalized in March 2024.
Operations
DWAC commenced trading on Nasdaq on September 3, 2021, following the sale of 25 million shares during its IPO.
On October 20, 2021, DWAC and Trump Media & Technology Group (TMTG) declared a definitive agreement to merge, enabling TMTG to become publicly listed. The formation of DWAC involved assistance from ARC Capital, a Shanghai-based entity known for facilitating Chinese companies’ listings on U.S. exchanges, which has been under SEC scrutiny for allegedly misrepresenting shell companies. Some investors expressed surprise upon learning their capital was backing a Trump-affiliated enterprise. In 2021, DWAC’s association with Trump was connected to China Yunhong Holdings until the lead banker committed to ending Chinese involvement in December 2021, announcing that Yunhong would undergo "dissolution and liquidation." Reuters reported in February 2022 that ARC Capital’s role in funding the SPAC was more significant than earlier disclosed.
In August 2022, shareholders approved four successive three-month extensions to finalize the merger, postponing related meetings until September 8, 2023. The company faced a deadline to complete the transaction by that date or secure approval from at least 65% of shareholders for an additional extension; otherwise, it risked liquidation. Subsequently, on September 5, shareholders consented to a one-year extension.
In March 2023, Digital World Acquisition terminated Patrick Orlando’s position as CEO.
An October 2023 filing revealed that after investors withdrew $467 million in commitments, DWAC intended to return the remaining $533 million of the original $1 billion raised.
On March 22, 2024, shareholders of DWAC approved the merger with TMTG. Following the vote, shares closed at $36.94 after opening at $43.92 and reaching an intraday peak of $46.70 prior to shareholder approval.
Investigation of illegal trading
On June 29, 2023, authorities arrested three individuals accused of trading DWAC stock based on confidential information before the merger announcement in 2021.
Patrick Orlando, founder of DWAC and a Miami-based banker, had been negotiating the deal with Trump since at least March 2021. This raised questions regarding potential breaches of securities regulations and exchange rules because SPACs are prohibited from targeting specific companies before their public offering. DWAC was announced in May 2021 and went public in September of that year. By mid-2021, TMTG affiliates were signaling to Wall Street investors that a SPAC merger was forthcoming. Initial merger talks involved another SPAC controlled by Orlando but shifted to DWAC due to size limitations. DWAC’s official filings asserted it had no "substantive discussions" with any prospective business combination target.
Orlando’s investment stake in DWAC appreciated by $420 million from his original $3 million contribution.
Towards the end of 2021, both the SEC and Financial Industry Regulatory Authority requested documents from DWAC concerning stock transactions and communications with TMTG prior to announcing the deal. In June 2022, the SEC broadened its investigation and subpoenas were later issued by a grand jury convened by the U.S. Attorney for the Southern District of New York targeting DWAC’s board and related records.
On July 3, 2023, DWAC declared its intention to resolve the matter by paying an $18 million penalty to the SEC and revising certain regulatory filings. The SEC formally publicized this settlement on July 20.
In October 2021, reports indicated that House Representative Marjorie Taylor Greene acquired DWAC shares valued between $15,000 and $50,000 subsequent to the announcement of the merger involving Trump.