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The Latest SPAC News and Rumors: August 29, 2022
by Marlena Haddad on 2022-08-29 at 12:01am

 


Below is a daily summary of links to the latest SPAC news and rumors gathered across the web. 

Latest SPAC News: New 1% excise tax on stock buybacks may have consequences for SPACs, investors and sponsors find ways to improve deal integrity, and DWAC falls as shareholders weigh delaying merger


New 1% Excise Tax on Stock Buybacks May Have Far-Reaching Consequences for Capital Markets, SPAC and M&A Transactions

On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022, H.R. 5376, a reconciliation bill that revives parts of the tax legislation from the ill-fated Build Back Better Act as part of a larger package also addressing climate change, energy and health care. In particular, the Act establishes a new one-percent excise tax on certain stock buybacks by domestic public companies. The Excise Tax has a broad reach that could unexpectedly affect a range of capital markets, SPAC and M&A transactions beyond plain vanilla stock buybacks.

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SPACs are overcoming expectations

After a series of rollercoaster years for the SPAC market, investors and sponsors are finding ways to improve deal integrity.

SPACs have never faced such a challenging environment, for a number of reasons. The overhang of the SEC’s proposed regulations regarding misleading financial projections have had a significant ripple effect.

However, the worst has possibly already passed for the SPAC market. Sponsors and banks have adopted a more cautious sentiment over the past three months since the SEC announced its proposal, but stakeholders are quickly adjusting.

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Trump-linked SPAC’s stock falls as shareholders weigh delaying merger with ex-president’s media firm

Digital World Acquisition Corporation (NASDAQ:DWAC), the company that plans to take Trump Media and Technology Group public, saw its stock price slide Monday as shareholders consider delaying the merger and the former president contends with a host of legal problems.

A Monday filing from DWAC said that voting for a yearlong delay would open Tuesday. The current deadline to take Trump Media public is Sept. 8. DWAC has warned that it may be forced to liquidate if the deadline is not extended. A shareholder meeting is scheduled for Sept. 6.

Shares of DWAC were down more than 8% to about $25 on Monday, off 16% this month and significantly below their 2022 peak of about $97.

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