Donald Trump could be walking away with a $3 billion bill after Digital World Acquisition Corporation (DWAC) shareholders on Friday voted in favor of a merger with his media business.
It comes at a critical time for the former president, who is beset by hundreds of millions of dollars in legal judgments and a 2024 campaign funding shortfall ahead of his rematch with President Joe Biden this fall.
However, the deal may not solve President Trump's immediate cash crunch, and he may not be able to quickly convert his holdings into cash.
Interested parties will likely be subject to a lock-up period of approximately six months, during which they will not be allowed to sell or transfer their shares unless the board of directors passes a resolution for special measures.
The vote on the merger of the blank check company and Trump Media & Technology Group took place during a special meeting of DWAC shareholders. The approved plan would allow Trump's company, which runs the social media site Truth Social, to take over Nasdaq-listed DWAC in the coming days or weeks.
The combined company will be renamed after Trump's company and its ticker symbol will change from DWAC to DJT, the former president's initials.
Trump himself will receive stock in the combined company, valued at more than $3 billion. Digital World's current stock price, which fell on Friday, has more than doubled this year as Trump became assured of being the Republican presidential nominee for the third straight time.
Friday's meeting was led by Digital World Acquisition Corporation CEO Eric Swider, who said the combined company would “provide a home for free speech and a platform to advance those values.” He said he was excited.
Trump himself did not immediately react to the decision, but he posts dozens of times a day on his social media sites, often touting business prospects. He said just yesterday that Truth Social is “the real voice of America!!”
Will Trump be able to use the windfall to pay his legal costs?
What remains to be seen is how much cash Trump will have access to during the next campaign. New York's attorney general is taking steps to seize his assets unless he pays $464 million plus interest to appeal recent financial fraud convictions against his company.
President Trump could be at risk of asset seizure as early as next Monday if he doesn't have the cash by then.
The expected windfall comes from the Federal Election Commission's latest 2024 campaign report, which shows Biden's re-election campaign significantly ahead of Trump's. The current president enjoys a cash advantage of $71.2 million to $33.5 million over President Trump as of the end of February.
One option for Mr. Trump to get cash faster would be for the company's board to vote on a special action.
The move comes as seven members of the combined company's board of directors include Devin Nunes, a former congressman and current CEO of Trump Media & Technology Group, and former Trump Cabinet member Linda McMahon. This may be possible because people close to Trump are expected to be selected. and his son Donald Trump Jr.
President Trump could also try to use the expected windfall to secure loans before the lock-up period ends. This is considered more complicated as the bank will need to provide him with an advance payment.
Possible return to Wall Street
The two companies first announced plans to merge in October 2021, but the merger was significantly delayed due to issues including an SEC takeover investigation and a federal grand jury investigation.
The merger also faced a lawsuit from the founders of Mr. Trump's media group, who said they planned to water down the value of their stock.
But those hurdles have clearly been cleared, and Friday's vote also marks a return to Wall Street, where Trump has favored and thrived throughout his career.
In 1995, Donald Trump purchased 40 Wall Street down the street from the New York Stock Exchange, a property that proved to be his most enduring connection to the public markets in decades. .
President Trump's foray into the public market began in 1995, when Trump Hotels and Casino Resorts began trading.
“Today is a very important day for us, the New York Stock Exchange,” President Trump said at the time.
However, this adventure did not last long, as the stock price fell below its IPO price by 1997, and the company was delisted a few years later.
But one legacy of that effort may live on. What was Trump's company's ticker symbol in the 1990s and early 2000s? D.J.T.
Ben Werschkul is Yahoo Finance's Washington correspondent.
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