A former executive of a blank check acquisition organization planning to take Donald Trump’s social media company public is seeking to block the deal until he receives a larger payout, according to a lawsuit filed Thursday in Delaware. filed a lawsuit.
ARC Global Investments II, run by Patrick Orlando, said the amount of stock it would have received when Digital World Acquisition merged with former President Trump’s Media & Technology Group Inc. was changed on short notice.
The company asked the Delaware Court of Chancery to expedite the case to resolve the stock before DWAC shareholders vote March 22 to approve the deal.
DWAC stock fell about 9% in afternoon trading to close at $41.16.
Orlando, DWAC and Trump’s company’s legal teams did not respond to requests for comment.
ARC’s lawsuit follows DWAC’s warning earlier this month that Orlando could delay the deal.
On Tuesday, Trump’s media company and DWAC sued ARC and Orlando in Sarasota, Fla., accusing Trump of trying to delay the merger, which is scheduled to close next month, and “reap a windfall profit through extortion.”
The dispute centers on the rate at which ARC’s Class B DWAC shares will be converted to Class A shares upon completion of the merger. ARC of Orlando said it should receive 1.78 Class A shares for each Class B share. According to DWAC, the ratio is 1.34. The difference between the two ratios is more than 2.5 million shares, the company said in a regulatory filing.
DWAC asked a Florida court to declare that the conversion company’s ratio of ARC shares to 1.34 is correct.
Earlier this month, the Securities and Exchange Commission cleared Mr. Trump’s company, which runs the messaging platform Truth Social, to complete the merger.
The combined company could be worth $10 billion, and the former president’s stake could be worth billions.
The agreement comes as President Trump faces more than $500 million in two separate judgments in New York. His lawyers said Wednesday that he was unable to post bail for the full amount of the $454 million judgment in the civil fraud case.
DWAC entered into a merger agreement with Trump’s company in October 2021 and has since been the subject of a Justice Department investigation and reached an $18 million settlement with the SEC over inaccurate disclosures.
Since signing the merger agreement, the company has fired Mr. Orlando and revamped its board of directors.
