This photo illustration shows an image of former President Donald Trump next to a phone screen displaying the Truth Social app on February 21, 2022 in Washington, DC.
Stefani Reynolds | AFP | Getty Images
Shareholders in Digital World Acquisition Corp. voted on Friday to approve a merger with Donald Trump’s social media company, a deal that could ultimately net the former president a profit of $3 billion or more.
The vote by DWAC shareholders comes about two and a half years after the so-called special purpose acquisition company announced plans to merge with Trump Media & Technology Group, the private company that owns the app platform Truth Social.
Trump also faces the possibility that New York Attorney General Letitia James will seek to collect a massive $454 million civil fraud judgment against him on Monday.
Shares of the newly combined Trump Media could begin trading publicly next week under the ticker symbol DJT, Trump’s initials.
Trump’s long-gone casino and hotel company also traded under this ticker symbol.
DWAC’s stock price fell as much as 12% following Friday’s shareholder vote, but recovered that decline by midday ET.
The value of Trump’s shares in the combined company would be affected by a decline in DWAC’s stock price.
FactSet data shows that 11% of tradable DWAC shares are shorted, meaning they are being used to make bets that the stock price will fall.
Several recently filed lawsuits over the terms of the merger did not affect the voting schedule, but could ultimately impact the allocation of shares to people who played key roles in implementing the merger in late 2021.
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Trump would have nearly 80 million shares of the combined company.
At DWAC stock’s opening price on Friday, that would be worth around $3 billion or more, although it’s not clear what the opening price of the combined company’s stock will be.
While the potential gain for Trump was enormous, it could not be realized immediately, at least not under the current terms of the deal. Trump will be prohibited from selling shares in the combined company for at least six months, and there is no guarantee that Trump Media’s shares will maintain the trading price levels that DWAC had before the merger.
It’s possible the board could vote to allow Trump to sell shares sooner. And that board could be filled with people close to Trump, including his son Donald Trump Jr., former wrestling company executive Linda McMahon and Trump’s former trade representative Robert Lighthizer, according to a list of planned nominations.
If the board agrees to lift the stock freeze, it could quickly free up a major source of cash for Trump, who is the presumptive Republican presidential nominee this year.
Trump is currently facing large bills from his lawyers in criminal and civil cases, as well as damages verdicts totaling over half a billion dollars in three different civil cases.
Earlier this week, Trump asked a New York appeals court to stay the $454 million fraud verdict in an attempt to overturn the verdict in the case. This court has yet to rule on his application.
Trump’s lawyers said in a court filing that he did not have enough cash to offer to bond companies as collateral for a bond that would secure the judgment and prevent James from collecting money.
But in a Truth Social post Friday, Trump claims, “I have almost five hundred million in cash right now.”
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2024-03-22 16:55:17
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