By Lucy Adautin
Former US President Donald Trump moved a step closer to realizing a substantial financial gain from his social media company, as investors in a blank-check acquisition company endorsed a merger valued at approximately $6 billion on Friday.
The agreement assesses Trump’s controlling interest in the company housing his Truth Social app at roughly $3.6 billion. This windfall may offer crucial support as Trump confronts the financial ramifications of numerous legal battles, including a $454 million judgment in a civil fraud case in New York.
Investors of Digital World Acquisition Corp., an investment vehicle, voted to combine with Trump Media & Technology Group, which owns Trump’s “Truth Social” platform. The action provides Trump a potential windfall as he faces legal problems, although he may not be able to access the funds for several months.
While the next step would be for the deal to be completed next week, its future is fraught with uncertainty. Digital World’s former CEO Patrick Orlando and former Trump business associates Andy Litinsky and Wes Moss have separately sued to block the merger, arguing they are entitled to more shares for their previous work on the deal.
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It’s unclear how and when these cases will be resolved. Even if the deal gets completed next week, Trump will not be allowed to sell any of his shares in the combined company for six months or borrow against them, based on terms he previously agreed.
The deal is also poised to deliver a vital $300 million cash infusion to TMTG. The social media company lost $10.6 million from its operations in the first nine months of 2023 after losing $23.2 million in 2022, and has been funding itself by borrowing $40.7 million through convertible promissory notes that can be paid back in stock.
Based on how Digital World’s shares are currently trading, TMTG would be valued at as much as $6 billion following its merger with Digital World on an undiluted basis and as much as $9.4 billion on fully diluted basis that takes into account warrants to be exercised and earnout shares to be issued.
Digital World’s shares have swung wildly, and there is no certainty they will continue to trade at these levels. A valuation for the combined company of more than $9 billion would be a little less than half that of Elon Musk’s much more popular social media company X, and reflects how many investors seized on the deal to bet on Trump’s brand.
In February, Digital World said Truth Social has so far had 8.9 million signups. X, by comparison, has more than half a billion monthly users, according to Musk.
