Washington, D.C., U.S. – The Securities and Exchange Commission has given the green light to the proposed merger of former President Donald Trump’s media venture with a special purpose acquisition company. This move marks a significant step for a deal that has been delayed for quite some time and would result in making the owner of Trump’s website, Truth Social, a publicly traded company. It would also unlock $300 million in investor funds.
Under the merger proposal, Digital World Acquisition, the SPAC that launched the merger for Trump Media and Technology Group in 2021, is set to hold a shareholder meeting within two days to vote on the adoption of the merger. Following the announcement, Digital World shares experienced an increase to about $50 on Thursday morning.
If the merger proceeds as anticipated, former President Trump would hold more than 78 million shares in the post-merger company, which at current prices would amount to nearly $4 billion. Trump, along with other investors, could potentially earn additional shares tied to the stock’s performance through a provision known as an “earnout,” as stated in a recent filing.
However, finance experts have expressed their reservations about the company’s valuation, which is estimated to be around $9 billion based on Digital World’s current price. Despite this high valuation, Trump Media generated $3.4 million in revenue and suffered a loss of $49 million during the first nine months of 2023, according to a recent SEC filing.
The merger would also open the company to the scrutiny and unpredictability of public markets, with investors being able to buy and sell shares based on Truth Social’s performance as its sole product. Nonetheless, the completion of the merger is expected to garner shareholder approval, suggesting a potential rise in share prices post-merger.
Despite the anticipated smooth approval of the merger, challenges have surfaced from Trump Media’s co-founders, who have recently threatened to hinder the merger from completion. These challenges add a layer of complexity to the already contentious deal, raising questions about the future success and stability of the post-merger company.