Former President Donald Trump could stand to gain as much as $4 billion from an upcoming merger involving his social media company. The deal could provide a huge financial relief for him, who needs to come up with $540 million in civil lawsuit judgments.
Since January 1st, the stock price of Digital World Acquisition Corporation, a “blank check” company created solely for the purpose of acquiring Trump Media & Technology Group, the parent company that operates President Trump’s Truth social platform, has traded at 161. It showed an astonishing increase of %.
Earlier this month, the Securities and Exchange Commission approved the pending merger, which could be worth up to $10 billion. A shareholder vote is scheduled to take place on March 22nd.
If the merger is approved, former President Trump’s stock could be worth up to $3.95 billion, with the former president owning about 79 million shares in the new joint venture, according to filings. It turns out.
But President Trump will have to wait at least five months for the lock-up period to end before selling the shares, unless the company files to speed up the timing.
“He needs the money, but he can’t sell a lot at once without risking a crash in the stock price,” Usha Rodriguez, a law professor at the University of Georgia, told Bloomberg.
“Once the lockup expires, the stock could be used as collateral for a loan to obtain cash without selling the stock.”
Jay Ritter, a finance professor at the University of Florida, told Bloomberg that it is unlikely that President Trump will be able to get banks to lend him money using locked-up stocks as collateral.
Nevertheless, despite Trump’s mounting legal problems, his financial position appears to be improving thanks to the dominance of his Republican political opponents in the presidential primaries.
The 45th president handily defeated former South Carolina Gov. Nikki Haley in Tuesday’s Michigan primary, repeating his landslide victories in Iowa, New Hampshire and the former ambassador’s home state.
Even though Truth Social has only a fraction of the user numbers boasted by major rivals such as bought up DWAC stock.
Observers say Trump is likely to use the Truth Social platform as an official bullying pulpit if he wins a second term, which would exponentially increase the app’s value.
The value the stock market has assigned to the deal has more than tripled since January as President Trump tightened his grip on winning the Republican presidential nomination.
Depending on how well investors support the deal, Mr. Trump will own between 58.1% and 69.4% of the combined company.
“The fundamental bullish case is that he’s restricting his tweets to the Truth Social platform, which means you have to sign up to see and interact with his tweets, and he doesn’t get any advertising revenue.” It’s going to be a lot more sexual,” said Matthew Tuttle of Tuttle.capital management told Bloomberg News.
Despite mounting legal troubles, Trump remains popular among Republican voters.
Earlier this month, a Manhattan judge imposed a hefty $454 million fine on Trump’s business after New York Attorney General Letitia James filed a lawsuit accusing Trump of inflating the value of its assets. .
President Trump also awarded E. Jean Carroll an 80 million dollar fine against magazine journalist E. Jean Carroll, who sued her for defamation after the former president publicly accused her of raping her in a department store more than 30 years ago. He was ordered to pay damages in excess of $1,000.
Indeed, the digital world has also revealed new obstacles to deal completion.
One of them is Patrick Orlando, former CEO of Digital World. He helped create the digital world in its current form and manages the sponsoring companies behind it.
Digital World said in its filing that Orlando may put the deal on hold because it wants to receive additional compensation.
Orlando could not be reached for comment.
Another potential hurdle involves TMTG co-founders Andy Litinski and Wes Moss, who are both on the board of directors, according to an 8-K filing by DWAC. He has reportedly threatened to block the takeover if he does not win a seat.
According to Digital World, TMTG will spend $38.5 million in debt financing from its inception in February 2021 to September 2023 and may issue up to $65 million in convertible notes to avoid a liquidity shortage. He said there is.
TMTG recorded total revenue of $3.4 million in the first nine months of 2023, up from $237,000 in the same period last year, according to a Digital World filing.
Operating loss was $10.6 million, down from $19.3 million in the year-ago period.
TMTG was launched to connect President Trump with his supporters after he was cut off from major social media platforms following the January 6, 2021, attack on the U.S. Capitol by his supporters.
Trump has 6.61 million followers on Truth Social, while X had more than 88 million followers at the time the platform permanently suspended him, and currently has 87.4 million followers on the platform.
According to Digital World, Truth Social has 8.9 million subscribers to date.
By comparison, X has more than 500 million monthly users, according to the social media platform’s owner Elon Musk.
The self-proclaimed “free speech absolutist” acquired Twitter on October 2, 2022, and has since rebranded it as X. On November 19, the San Francisco-based app reversed its position on President Trump.
Last August, Trump broke his promise to stick with Truth Social and posted a photo of himself on X while he was booked into the Fulton County Jail in Georgia.
He has not posted on X since then and uses Truth Social as his primary platform to reach voters.
with post wire
