Former U.S. President Donald Trump moved closer on Friday to potentially gaining a significant windfall from his social media venture, as investors in a special purpose acquisition company (SPAC) approved a merger deal valued at around $6 billion.
The agreement values Trump’s controlling stake in the company, which owns his app Truth Social, at approximately $3.6 billion. This windfall could prove crucial as Trump deals with the financial consequences of several legal battles, including a $454 million judgment in a civil fraud case in New York.
Shareholders of Digital World Acquisition Corp (DWAC), the SPAC facilitating the listing of Trump Media & Technology Group through a merger, voted in favor of the deal on Friday. The combined company is set to trade under the stock symbol DJT, representing Donald J. Trump.
While the next step is for the deal to be finalized next week, its outcome remains uncertain. Former Digital World CEO Patrick Orlando and former Trump associates Andy Litinsky and Wes Moss have separately filed lawsuits to block the merger, claiming they are owed more shares for their previous involvement in the deal.
The resolution and timing of these cases are unclear. Even if the deal is completed next week, Trump will be prohibited from selling any of his shares in the merged company for six months or using them as collateral, as per prior agreements.
The merger is also expected to provide a crucial $300 million cash injection to TMTG. Truth Social has incurred losses of $10.6 million in the first nine months of 2023 and $23.2 million in 2022, funding itself through $40.7 million in convertible promissory notes.
Based on the current trading value of Digital World’s shares, TMTG could be valued at up to $6 billion post-merger on an undiluted basis, and up to $9.4 billion on a fully diluted basis considering warrants and earnout shares.
However, the volatility of Digital World’s shares poses uncertainties. A valuation exceeding $9 billion would still be less than half of Elon Musk’s more popular social media company X, indicating investors’ bets on Trump’s brand.
In February, Truth Social reported 8.9 million signups, far less than X’s over half a billion monthly users.
Trump, currently running for U.S. President again, is expected to own between 58.1% and 69.4% of the combined company, depending on investor support.
TMTG, launched with the help of Litinsky and Moss, aims to provide Trump with a platform to connect with his supporters after being banned from major social media platforms following the Jan. 6, 2021 Capitol attack.
Since the merger agreement announcement in October 2021, the deal has faced numerous hurdles and delays, including investigations by the Department of Justice and the SEC, CEO changes at Digital World, and board reshuffles.
In July, Digital World settled with the SEC for $18 million over allegations of misleading investors regarding the TMTG acquisition plan. In August, Trump posted his jail booking mug shot on X, but has primarily used Truth Social since then.
{Matzav.com}
Letitia James will now take that all away.