Trump’s Media-Focused Company Is All Set To Go Public Now as Digital World Shareholders Approve the Merger Proposal

This is not a recommendation for investment. The author does not hold any positions in the mentioned stocks.

Following a tense and dramatic series of events, reminiscent of a soap opera, the shareholders of Digital World, a Special Purpose Acquisition Company (SPAC), have given their long-awaited approval for the reverse merger with Truth Social’s parent company, the Trump Media and Technology Group (TMTG). This paves the way for the combined company’s shares to be listed on the Nasdaq exchange.

As mentioned in a previous post in February, Digital World had announced a shareholder meeting scheduled for 10:00 a.m. on the 22nd of March, 2024, to discuss the potential merger with Trump Media and Technology Group.

The meeting concluded only a few minutes ago and we have successfully obtained the necessary approval to merge with TMTG. As a result, the shares of the newly combined company will begin trading on the Nasdaq exchange next week under the symbol DJT. The company will now be known as Trump Media and Technology Group Corp. For those interested, the shareholder vote can be accessed via a Rumble live stream here

It should be noted that Arc Global Investments, headed by the SPAC’s biggest investor Patrick Orlando, had not yet committed to voting in favor of the merger until the final moments. This was due to a disagreement regarding the calculation of post-merger share issuance, with further details provided towards the end.

It should be noted that the combined company will be owned by former US President Trump, who will hold 78.75 million shares that are currently valued at approximately $3.5 billion. As a result, Trump stands to benefit greatly from this venture. However, there is a six-month lock-up period for Trump’s shares, meaning that he will not be able to pay off a $454 million civil fraud penalty by selling his shares in the new company.

Today’s merger is predicted to release approximately $293 million in funds, which Digital World had acquired through its IPO. This will help alleviate the significant financial difficulties that Truth Social – a platform similar to X that currently acts as a platform for Trump’s beliefs – has been struggling with for an extended period of time. As of September 2023, Truth Social had a mere $1.8 million in cash, while its total liabilities amounted to $60.5 million.

As it awaits its upcoming merger, Digital World has been taking steps to improve its financial situation. In February, the company issued promissory notes valued at $50 million to strengthen its cash reserves. Additionally, Digital World disclosed plans to award a total of $6.38 million in cash bonuses to incentivize and retain “employees and other personnel associated with TMTG.”Furthermore, the company has offered 40 million earnout shares as a potential bonus.

Last-Minute Lawsuits Complicate Merger Between Digital World and Trump Media and Technology Group

Recently, it was revealed that the proposed merger between Digital World and Trump Media and Technology Group was at risk due to multiple legal battles, including one brought forth by the co-founders of Trump’s media-focused entity. The duo, Andy Litinsky and Wes Moss, alleged that former US President Trump intentionally worked to diminish their significant stake in TMTG, which could have been valued at hundreds of millions of dollars. They claimed that Trump’s actions, including increasing the amount of authorized stock from 120 million to 1 billion shares, were a deliberate attempt to dilute their original 8.6 percent stake. However, Trump’s legal team argues that the duo’s original services agreement with TMTG was already voided, therefore invalidating their

Furthermore, in a legal dispute, Patrick Orlando, the former CEO of Digital World, and Arc Global Investments II, the company’s sponsor, accused Eric Swider, the current CEO, and three other board members of the SPAC of incorrectly calculating Arc’s ownership, which would result in a loss of over 2 million shares for Arc. In response, Digital World filed a counter-suit, alleging that Orlando had attempted to use the proposed merger between DWAC and TMTG as leverage for personal gain through extortion.

The motion for an injunction against the planned meeting of Digital World’s shareholders on March 22nd was ultimately denied by the Delaware Court of Chancery. The court found that DWAC’s proposal to place the disputed shares in escrow was satisfactory.