Trump Media merger wins investor approval, netting Trump potential windfall

The vote Friday by investors in Digital World Acquisition authorized the special purpose acquisition company, or SPAC, to merge with Trump Media & Technology Group as part of a process that will avoid a more traditional public offering.

Trump will own about 60 percent of the company, which at Digital World’s current share price would be worth about $3.3 billion. He and other investors could earn tens of millions more shares through an “earnout” provision tied to the stock’s performance, Digital World said in an SEC filing.

But a lockup provision in the merger agreement will prevent Trump and other major shareholders from selling their shares for six months unless he is granted a waiver by the post-merger company’s board.That could limit Trump’s ability to use the windfall to help pay off the hundreds of millions of dollars he owes in legal judgments. Trump does not have the cash to secure a bond that would delay enforcement of the $464 million judgment in a New York fraud case, his lawyers said. If he does not post a bond by Monday the New York attorney general could move to seize his bank accounts, real estate and other assets.

Any lockup change or waiver will be decided by the post-merger company’s board, which will be stocked with Trump allies, an SEC filing shows. The board’s nominees include Trump’s oldest son Donald Trump Jr.; Trump’s former trade representative Robert E. Lighthizer; Linda McMahon, who headed the Small Business Administration under Trump; and Kash Patel, who served on Trump’s National Security Council.

The post-merger company, which will be called Trump Media, could begin trading on the Nasdaq stock exchange as soon as Monday under the ticker symbol of Trump’s initials, DJT. That symbol was also used for Trump’s only other public company, Trump Hotels and Casino Resorts, which collapsed into a penny stock in less than a decade and filed for bankruptcy in 2004.

The merger will net Trump Media $300 million that Digital World initially raised from investors. Trump’s allies and company executives will also be granted bundles of shares in the new company that could be worth millions of dollars.

But trading on the stock market will also open the company to more public scrutiny, and any drops in share prices would affect the value of those stakes. Though launched as an alternative to Twitter, Truth Social retains a fraction of its online audience

Critics have said Trump Media is a “meme stock” with a more than $6 billion valuation they say is out of sync with its financial outlook. Trump Media lost $49 million in the first nine months of last year and brought in $3.4 million in revenue, Digital World said in an SEC filing.

Two former contestants from his reality show “The Apprentice” proposed the idea of a “free speech” media and internet business to Trump after he was kicked from Twitter and other social networks following the U.S. Capitol riots on Jan. 6, 2021.

The company’s merger proposal with Digital World has faced years of hurdles and delays since then due to investigations by the Securities and Exchange Commission, which agreed to an $18 million settlement, and the Justice Department, which has probed insider-trading and money-laundering allegations involving Digital World investors.

Last summer, when the deal’s certainty was in doubt, Trump asked billionaire Elon Musk whether he wanted to buy Truth Social, two people with knowledge of the conversation told The Washington Post. The proposal went nowhere, though the two men have communicated since.

More recently, the deal has been embroiled in a legal battle royale, with four lawsuits in three states involving Trump Media, Digital World, the co-founders Andy Litinsky and Wes Moss, and Digital World’s former chief executive Patrick Orlando.

Orlando, who was fired as chief last year but remains in control of Digital World’s biggest founding investor Arc Global Investments II, had refused to vote in support of the merger before Friday’s vote, potentially imperiling the deal, attorneys for Trump Media and Digital World said in a lawsuit this week seeking to force his vote. He spoke only briefly on a shareholder call Friday and did not offer further comment on the suit.

Digital World’s more than 400,000 retail investors included supporters of Trump and speculators hoping to cash in on the deal’s attention. One investor, dressed in a pirate costume and calling himself “Captain DWAC,” live-streamed the shareholder vote on Rumble and played sounds of applause when the successful vote was announced.

Digital World’s share price slid 5 percent during the meeting.

This is a developing story. Please check back for updates.