Digital World Acquisition Corp (NASDAQ: DWAC) will continue with its scheduled shareholder vote on the pending merger with Trump Media & Technology Group Corp. (TMTG), despite a legal challenge from its sponsor, ARC Global Investments II, LLC. The Delaware Chancery Court denied ARC's request for an expedited hearing that could have delayed the vote.
ARC, controlled by Patrick Orlando, Digital World's former chairman and CEO, filed a lawsuit alleging that Digital World was not committing to issue ARC the number of shares it claims to be owed upon completion of the merger. The complaint, filed on February 28, 2024, requested a conversion ratio of 1.78:1 for ARC's shares.
The court held a hearing on Monday to address ARC's motion to expedite the case, with arguments presented by Digital World's legal representative, Brad Bondi of Paul Hastings LLP. The Vice Chancellor ruled against holding a hearing before the shareholder vote on March 22, 2024, finding that Digital World's plan to place disputed shares in escrow was sufficient to prevent irreparable harm.
The court's decision allows the merger vote to proceed as planned, with Digital World's public disclosures deemed adequate for shareholder decision-making. By Thursday, ARC and Digital World are required to propose a schedule to resolve the lawsuit within 150 days post-merger and agree on the terms of the escrow account for disputed shares.
Eric Swider, CEO of Digital World, expressed relief at the court's ruling, emphasizing the importance of moving forward with the merger vote and the protection of shareholder interests.
This development follows a separate lawsuit filed by Digital World in Florida on February 27, 2024, with the Delaware court requesting information on how both litigations will coexist.
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