An executive leading a deal that could be a financial lifeline for former President Donald Trump issued an urgent message asking shareholders to help usher in the impending merger that may offer the presumptive Republican nominee some cash flow amid his legal troubles.
An email blast from Truth Social offered an "IMPORTANT" message from Digital World Acquisition Corporation (DWAC) CEO Eric Swider, who officially took over the publicly traded shell company in July.
"This is an urgent message for all Digital World Acquisition Corp. shareholders," Swider said in the Wednesday email. "A special Shareholder Meeting of Digital World Acquisition Corp. will be held on March 22, 2024, and your proxy vote is needed. This meeting is being convened for a pivotal purpose - to seek your approval for a proposed merger in which Digital World Acquisition Corp. will become Trump Media & Technology Group Corp, as well as solicit approval for additional proposals to facilitate the Merger."
Trump, who was recently hit with a massive $454 million penalty in the New York civil fraud case, could benefit massively from the proposed deal. Once it closes, his stake in his social media company, Trump Media & Technology Group (TMTG), could be worth as much as $3 billion. TMTG is the parent company of Trump's Truth Social, the platform he started after being banned from sites like Twitter and Facebook in the wake of the January 6, 2021, riot at the U.S. Capitol.
Because Trump would own 79 million shares in the postmerger company, the deal could give him a "financial lifeline," according to The New York Times. The stock closed on Wednesday at $40.19 per share. At that price, Trump's overwhelmingly majority stake would be worth over $3.1 billion.
TMTG announced in October 2021 that it had reached a deal to go public by merging with DWAC. However, the agreement had been held up by a two-year investigation by the Securities and Exchange Commission (SEC) because special purpose acquisition companies, like DWAC, are not supposed to have a deal arranged before an initial public offering (IPO). DWAC raised $300 million in its IPO in September 2021.
The SEC signed off on the deal last month after DWAC agreed to pay regulators an $18 million fine and revise its filings to comply with federal securities laws. The SEC had previously said the earlier corporate disclosures were "particularly problematic because investors focus on factors such as the SPAC's management team and potential merger targets when making financial decisions."
In Wednesday's email, Swider said that voting on the merger had begun and that votes could be cast ahead of the March 22 meeting date through a toll-free number. He added that DWAC's Board of Directors recommended voting in favor of the deal and thanked shareholders for their "continued support and confidence in our collective vision."
But even if the merger is successful, Trump won't be able to liquidate his shares for some much-needed cash flow. Most mergers prevent major shareholders from selling shares for six months after a deal closes to assure investors that these shareholders will not all immediately cash out at once, which would, in turn, depress the stock price.
Trump would, however, be able to transfer his shares to a trust or immediate family member. The lockup provisions could also be waived, but DWAC would need the consent of other major shareholders.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
fairness meter
About the writer
Katherine Fung is a Newsweek reporter based in New York City. Her focus is reporting on U.S. and world politics. ... Read more