Digital World Acquisition Corp. (DWAC) shareholders made a pivotal move last Friday. They greenlit the merger with Trump Media & Technology Group. The entity behind the Truth Social app platform might hand Donald Trump a $3 billion profit. This corporate coupling has been in the pipeline for over two years. DWAC, a special purpose acquisition company, had heralded its intentions to join Trump's firm.
(Photo : Getty Images/CHRIS DELMAS/AFP)
Trump Faces Legal Financial Drama as Merger Unfolds
Coinciding with this corporate development, Trump anticipates legal maneuvers from Attorney General Letitia James. Coming Monday, she may pursue a hefty $454 million civil fraud judgment against him. Trump's financial stakes don't end there. His share value in Trump Media might fluctuate with the market performance of the newly public company. DWAC's opening market performance was less than stellar. Stock prices dipped 12% post-vote before recovering slightly by noon.
Market reactions remain paramount as trading commences under the stock symbol DJT, mirroring Trump's initials. The stock's behavior is closely observed, with FactSet data revealing that 11% of DWAC's shares are short-sold. Market players are betting against the stock, indicating a lack of confidence in its future performance.
What Does This Merger Mean for Share Allocation?
The vote's outcome holds further intrigue as lawsuits swirl around the merger terms. These litigations could influence how shares are apportioned among those pivotal in propelling the merger from its late 2021 inception.
Trump is set to claim nearly 80 million shares of the amalgamated entity. With DWAC's Friday opening share price as a gauge, the former president's share value could soar beyond $3 billion. However, the merged company's initial share price is a variable yet to be determined.
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Can Trump Capitalize on the Merger Immediately?
Despite the apparent financial boon, there's a catch. Trump is restricted from trading his shares in Trump Media for at least half a year. This lock-up period is standard in such deals. It means that the actual worth of his shares is speculative and bound by market vicissitudes.
Interestingly, the company's board could alter this condition, allowing Trump earlier access to liquidate his shares. This board is expected to include allies such as Donald Trump Jr., Linda McMahon, and Robert Lighthizer, which may affect such a decision.
Trump's current financial obligations are gargantuan. He has legal fees from criminal and civil cases; liabilities exceed a half-billion dollars combined with other judgments. In an apparent paradox, Trump's legal team claimed a scarcity of liquid assets in court filings to secure a bond against James' collection efforts. Yet, Trump's statement on Truth Social claimed a near half-billion-dollar cash reserve.
As Trump Media prepares to step into the public trading arena, the intersection of legal, financial, and regulatory outcomes will forge its path forward. Trump's anticipated fiscal infusion through the DWAC merger is enveloped in opportunity and uncertainty, mirroring the complexities of the former president's entwined business and political narratives.
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