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Trump unlocks potential $3bn windfall after social media Spac deal

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Donald Trump’s social media business will become publicly listed after shareholders of a blank-cheque company approved the deal, unlocking a potential $3bn-plus windfall for the former US president as he seeks cash to cover massive legal liabilities.

Trump Media & Technology Group, the company behind his Truth Social site, will list on the Nasdaq exchange with the ticker symbol DJT, Trump’s initials, next week.

Shares in Digital World Acquisition Corporation, the special purpose acquisition company with which TMTG first announced merger plans in late 2021, were down approximately 1.6 per cent after Friday’s announcement.

The vote comes at a crucial time for Trump, who is facing mounting legal bills and has been trying to raise almost $500mn to prevent the enforcement of a fraud judgment in New York. 

Trump is subject to a lock-up agreement that prevents him from selling his shares for six months, but may be able use his large stake in the business as collateral to borrow money.

He could also seek approval from the merged company’s board, which is set to include his son Donald Trump Jr as well as several officials who served under his presidential administration, to start selling his stake immediately to raise cash.

If Trump is allowed to sell some or all of his stake, it could put downward pressure on the stock and potentially cause losses for some of the retail investors who piled into DWAC in recent months, more than doubling its share price this year.

The shareholders’ approval of the transaction brings to an end a drawn-out 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 $875mn valuation.

Little was known about TMTG at the time other than it would operate a social media platform to compete with “Big Tech” rivals such as Twitter and Facebook. Nevertheless, DWAC became one of the best performing stocks as its shares soared by more than 400 per cent following the announcement.

However, the deal was marred by delays and faced investigations by the US Securities and Exchange Commission as well as federal prosecutors.

In July, DWAC agreed to pay an $18mn penalty to the SEC to settle fraud charges stemming from its initial public offering. The Wall Street watchdog found that executives behind the Spac had already had extensive discussions to merge with TMTG before it became a publicly listed company, something that is forbidden for blank-cheque companies, and had “failed to disclose a material conflict of interest.”

At the same time, the US attorney in Manhattan brought insider trading charges against three men, alleging one of DWAC’s former board members shared information about the transaction with two associates during a trip to Las Vegas and helped them make $22.8mn from illicit trades.

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