Open Editor's Digest for free
Rula Khalaf, editor of the Financial Times, picks her favorite stories in this weekly newsletter.
Donald Trump's social media business will become publicly listed after shareholders in a blank-cheque company approved the deal, opening up a potential $3 billion windfall for the former US president as he seeks to cover huge legal liabilities.
Trump Media and Technology Group, the company behind his website Truth Social, will list its shares on the Nasdaq stock exchange with the symbol DJT, Trump's initials, next week.
The vote comes at a critical time for Trump, who faces mounting legal bills ahead of what is expected to be the most expensive election campaign in US history.
He has been fighting to raise nearly $500 million to prevent asset seizures as part of a fraud enforcement ruling in New York.
Trump is subject to an embargo agreement that prevents him from selling his shares for six months, but he may be able to use his large stake in the company as collateral to borrow money.
He could also get approval from the combined company's board of directors, which is set to include his son Donald Trump Jr. as well as several officials who served in his administration, to immediately begin selling his stake to raise money.
The vote contrasts with a pattern of financial setbacks for Trump and his campaign, which has spent more than $52 million on legal battles in 2023.
Maintaining his social media company's high rating could enhance his image as a successful businessman, which was crucial to his electoral appeal but was undermined by the ruling in the New York case.
Shares of Digital World Acquisition Corporation, the SPAC with which TMTG first announced merger plans in late 2021, fell 13.7% after Friday's announcement.
If Trump is allowed to sell some or all of his stake, it could add downward pressure on the stock and potentially cause losses for some retail investors who have piled into DWAC in recent months, more than doubling its stock price this year.
TMTG is banking on Trump's popularity among Republican voters which translates into users for Truth Social. The company estimates its social media app will reach 10 million users in 2024 and that number will double next year, according to a presentation from December 2023.
The Florida-based company also plans to launch Truth+, which will provide what it calls “unwoke” entertainment to American audiences. TMTG plans to launch an on-demand streaming service next year, and estimates it will have 4 million users by 2026.
Shareholder approval of the deal ends a long saga that began in October 2021, when DWAC and TMTG announced they had signed a deal to take Trump's media business public at a valuation of $875 million.
Little was known about TMTG, other than that it would operate a social media platform to compete with big tech rivals like Twitter and Facebook.
But DWAC surged more than 400 percent in the days following the 2021 announcement.
Recommended
The deal was marred by delays and faced investigations by the US Securities and Exchange Commission and federal prosecutors.
In July, DWAC agreed to pay an $18 million fine to the Securities and Exchange Commission to settle fraud charges stemming from its initial public offering.
The Wall Street watchdog found that the executives behind the SPAC actually held extensive discussions to merge with TMTG before it became a publicly traded company, which is prohibited for blank check companies, and “failed to disclose a material conflict of interest.” .
At the same time, the U.S. Attorney in Manhattan brought insider trading charges against three men, alleging that a former DWAC board member shared information about the deal with two of his associates during a trip to Las Vegas and helped them make $22.8 million in illicit trades.
