(Scypre.com) – In a recent development from Digital World Acquisition Corporation (DWAC) and the realm of social media, shareholders of DWAC have given their nod to a merger with the social media venture spearheaded by former President Donald Trump. This merger is poised to significantly benefit Trump, potentially enriching him by over $3 billion.
This decision arrived roughly two and a half years after DWAC, a special purpose acquisition company (SPAC), disclosed its intention to combine forces with Trump Media & Technology Group. This group is the proprietor of Truth Social, a social media application platform.
This crucial shareholder vote occurred amidst Trump’s legal battles, particularly with the anticipation that New York Attorney General Letitia James might commence efforts to enforce a hefty $454 million civil fraud judgment against him. Following the merger’s approval, the new entity, Trump Media, is expected to see its shares publicly traded possibly as soon as the next week, under the stock symbol “DJT”—an acronym representing Trump’s initials. Interestingly, this ticker was previously associated with Trump’s casino and hotel business.
The merger’s approval led to a temporary 12% decline in DWAC’s share value, although it managed to recover a significant portion of this loss by midday Eastern Time. Any fluctuation in DWAC’s share price directly impacts the value of Trump’s stake in the combined entity. Current data indicates that a notable 11% of DWAC’s tradable shares are short-sold, signifying a speculative bet on the share price’s decline.
Despite the controversies and legal challenges surrounding the merger’s terms, these issues have not stalled the voting process. However, they may influence the share distribution to key figures instrumental in initiating the merger back in late 2021. Trump is expected to hold nearly 80 million shares in the merged company. Based on DWAC’s initial share price on the day of the vote, Trump’s holdings could be valued at approximately $3 billion or more, although the exact value hinges on the opening share price post-merger.
The merger agreement places a temporary restriction on Trump, preventing him from selling his shares in the newly formed company for a minimum of six months. This clause, however, does not ensure the shares’ value post-merger will remain at the same level as DWAC’s prior to the merger. There’s a possibility that the company’s board of directors, potentially including allies and family members such as Donald Trump Jr., former wrestling executive Linda McMahon, and former trade representative Robert Lighthizer, could vote to lift this restriction earlier, thereby providing Trump with a substantial liquidity source.
Trump, who is facing significant legal expenses from ongoing criminal and civil litigations, as well as judgments from three separate civil cases totaling over half a billion dollars, could benefit from this liquidity. He has recently appealed for a stay on the $454 million fraud judgment in a New York appeals court, arguing financial incapacity to secure a bond that would delay the judgment’s collection by James.
Nevertheless, Trump claimed in a Truth Social post that he possesses nearly half a billion dollars in cash, highlighting the complex financial and legal web surrounding the former president as he navigates these challenges.