Truth Social merger approved, giving Trump potential source of cash

Shareholders of Digital World Acquisition Corp. (DWAC) approved a merger Friday with Truth Social, a media startup owned by former President Trump, teeing up its stock market debut and a potential $3.5 billion windfall for Trump.

The long-delayed merger between the blank check company and Trump Media & Technology Group (TMTG) received regulatory approval from the Securities and Exchange Commission (SEC) last month.

Trump stands to make about $3.5 billion from the deal, given the nearly 79 million shares he would control in the newly merged company.

The stock has whipsawed in value throughout Friday after opening at roughly $44 per share, rising as high $46.70 and falling as low as $38.12 before settling near $41 shortly before noon.

The potential windfall comes as the former president struggles to secure a $464 million bond in his New York civil fraud case. Trump’s lawyers admitted earlier this week that it was “impossible” to secure the full appeal bond due to a lack of cash on hand.

If Trump cannot secure the half billion-dollar bond by Monday, he could risk the seizure of his assets. The New York attorney general’s office has taken a first step toward seizing Trump’s golf resort and private estate known as Seven Springs after filing judgments in Westchester County.

Entering a judgment in the counties where Trump owns properties is the first step toward attempting to recover them.

A judgment has already been entered in New York City, where Trump’s civil fraud trial took place and where the former president’s famous 40 Wall Street and Trump Tower properties are.

Despite the potential windfall coming his way, Trump won’t be able to immediately access the money, due to a provision that prevents insiders from selling new shares for six months.

The merger to take Trump’s Truth Social platform public has faced several setbacks since talks began in October 2021.

A former DWAC board member and two others were charged with insider trading last June after they allegedly made $22 million by buying stock in the company ahead of the merger announcement.

The company was also fined $18 million by the SEC last July for allegedly misleading investors and the agency by failing to disclose that DWAC’s future CEO and board chair had been in talks with TMTG before going public.

In regulatory filings ahead of Friday’s shareholder vote, DWAC pointed to its previous dustups with the SEC as a potential risk.

It also cited Trump’s role in TMTG as a risk factor, noting the company’s “success depends in part on the popularity of its brand and the reputation and popularity” of the former president.

Because Trump will hold nearly 60 percent of shares in the new company, DWAC warned he would be able to determine matters sent to the stockholders for approval and that his interests may not always align with the rest of the stockholders.

The merger is also facing several lawsuits from former company leaders, including TMTG co-founders Andy Litinsky and Wes Moss and former DWAC chair and CEO Patrick Orlando.

Litinsky and Moss accused TMTG of attempting to dilute their stake in the company, while Orlando sued DWAC for a bigger payout from the merger, according to The Washington Post. Earlier this week, DWAC sued the former chairman to force him to vote in favor of the deal.

Updated at 3:09 p.m. EDT.

The Associated Press contributed.

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