Donald Trump’s media company is poised for a breakthrough as it approaches a potential $300 million SPAC merger, marking the end of a two-year regulatory battle with federal securities regulators in the United States. The parent company, Trump Media & Technology Group (TMTG), has garnered attention with its flagship platform, Truth Social, which emerged as a right-wing alternative to Twitter following Trump’s ban for inciting violence at the US Capitol in early 2021. Although Twitter has since lifted the ban, Trump’s return to the platform remains uncertain.
The DWAC-TMTG Merger: A Long-awaited Event
In October 2021, TMTG announced its intention to go public on the Nasdaq stock exchange through a $300 million merger with Digital World Acquisition Corp. (DWAC), a blank-check corporation. DWAC quickly gained prominence among retail investors eager to capitalize on the Trump brand, resulting in its stock skyrocketing to over $97 per share. But it has been delayed in the US. Securities and Exchange Commission (SEC) approval of the merger and allegations of violations of federal securities laws.
A Tentative Deal and Merger Deadline
On July 3, DWAC made a significant announcement in a regulatory filing, disclosing a tentative deal with the SEC. As part of the agreement, DWAC agreed to pay an $18 million civil penalty, paving the way for the completion of the merger. The closing date for the merger is set for September 8, 2023. Failure to meet this deadline would result in the dissolution of DWAC, with the $300 million returned to investors. Notably, DWAC had previously requested extensions from retail investors, a task that proved challenging.
Allegations of SPAC Rule Violations and Insider Trading
Shortly after the DWAC-TMTG merger was revealed, the New York Times reported discussions between representatives of the two companies even before DWAC’s public debut. Such pre-existing merger deals are in violation of federal securities laws governing special purpose acquisition companies (SPACs) like DWAC. Additionally, DWAC faced criminal charges related to insider trading, leading to the arrest of three early investors, including a former DWAC board member. The SEC and the US Department of Justice alleged that these individuals traded DWAC stock with advanced knowledge of the merger plans with TMTG.
Legal Challenges and Trump’s Media Company
These legal challenges add to Donald Trump’s existing legal troubles, including indictments related to hush money payments made to adult movie actress Stormy Daniels before the 2016 presidential election. Moreover, the US Justice Department charged Trump with 37 felony counts of mishandling classified documents. He is also under investigation in Georgia over alleged attempts to interfere with the 2020 presidential election results.
A Promising Future for Truth Social
With two major legal obstacles now resolved, Trump’s media company is inching closer to its much-anticipated debut on the stock market. This development aligns with the upcoming 2024 presidential election, where Trump is expected to represent the Republican Party and potentially face off against President Joe Biden once again.
The potential $300 million SPAC merger between TMTG and DWAC marks a significant milestone for Donald Trump’s media company. The journey has not been without challenges, including regulatory delays, allegations of securities law violations, and criminal charges against early investors. However, with these hurdles in the past, the future appears promising for Truth Social. As the 2024 presidential election approaches, Trump’s media presence is poised to make a comeback, potentially shaping the political and media landscape for years to come.
