Former U.S. President Donald Trump moved closer on Friday to realizing significant gains from his social media venture, as investors in a blank-check acquisition company approved a merger deal valued at approximately $5 billion.
The agreement places a value of about $3 billion on Trump’s controlling stake in the company that oversees his Truth Social app. This windfall could prove crucial as Trump navigates the financial repercussions of multiple legal battles, including a $454 million judgment in a civil fraud case in New York.
Shareholders of Digital World Acquisition Corp (DWAC), the Special Purpose Acquisition Company (SPAC) facilitating Trump Media & Technology Group’s listing on the stock market through a merger, overwhelmingly supported the deal on Friday.
While the next procedural step involves completing the merger next week, the deal’s future is clouded with uncertainty. Former CEO of Digital World, Patrick Orlando, and former Trump associates Andy Litinsky and Wes Moss have filed lawsuits seeking to block the merger, arguing that they are entitled to more shares for their prior involvement in the deal.
The resolution and timing of these legal challenges remain uncertain. Even upon completion of the merger next week, Trump will be subject to restrictions, preventing him from selling any of his shares in the combined company for six months or using them as collateral, as per prior agreements.
Moreover, the deal is expected to inject a crucial $300 million cash infusion into TMTG. The social media company has incurred losses of $10.6 million in operations during the first nine months of 2023, following a $23.2 million loss in 2022. To sustain itself, TMTG has borrowed $40.7 million through convertible promissory notes repayable in stock.
Based on current trading levels of Digital World’s shares, TMTG could be valued at up to $5 billion post-merger on an undiluted basis, and up to $8 billion on a fully diluted basis, accounting for warrants and earnout shares.