A merger deal worth billions of dollars
Trump Media & Technology Group (TMTG), the company behind former President Donald Trump’s social media platform Truth Social, has received approval from the U.S. Securities and Exchange Commission (SEC) to merge with a blank-check company and go public. The merger deal, which was announced in October 2021, values TMTG at up to $10 billion.
The blank-check company, Digital World Acquisition Corp. (DWAC), is a special purpose acquisition company (SPAC) that raised $300 million in its initial public offering in September 2021. SPACs are shell companies that raise funds from investors to acquire or merge with a private company and take it public, bypassing the traditional IPO process.
DWAC said in a press release on Wednesday that the SEC had declared its registration statement for the merger with TMTG effective, and that it would announce the date of a special meeting of its stockholders to vote on the merger within two business days. The merger is expected to close shortly after the stockholder approval, subject to customary closing conditions.
A platform to challenge Big Tech censorship
TMTG is the parent company of Truth Social, a social media platform that Trump launched in October 2021, after being banned from major platforms such as Twitter, Facebook, and YouTube following the January 6 Capitol riot. Trump claimed that Truth Social would be a “rival to the liberal media consortium” and a “beacon of free speech” that would challenge the “tyranny of Big Tech”.
According to its website, Truth Social is a platform that allows users to “share their opinions, thoughts, and news without being censored or silenced”. The platform also plans to launch a subscription video-on-demand service called TMTG+, which will feature “non-woke” entertainment content, as well as a cloud service called TMTG Cloud, which will offer “patriot-powered” technology solutions.
Truth Social is currently in beta testing and is expected to launch in the first quarter of 2024. The platform has already attracted more than 10 million pre-registrations, according to TMTG. The platform also has a prominent supporter in former California Rep. Devin Nunes, who resigned from Congress in December 2021 to become the CEO of TMTG.
A stock market sensation with legal troubles
The announcement of the merger deal between TMTG and DWAC in October 2021 caused a frenzy in the stock market, as DWAC shares soared more than 800% in a single day, reaching a high of $175. The stock has since fluctuated, but still trades above $50, giving DWAC a market capitalization of over $4 billion.
However, the merger deal has also faced several legal and regulatory hurdles, as both TMTG and DWAC have been under investigation by the SEC and the Department of Justice (DOJ) for various allegations. In June 2021, the DOJ charged three individuals, including a former DWAC board member, with insider trading, accusing them of making $22 million by buying DWAC shares before the merger announcement. In July 2021, the SEC fined DWAC $18 million for misleading investors and the agency by failing to disclose that it had been in talks with TMTG before its IPO.
In addition, TMTG has been sued by several parties, including Twitter, which accused TMTG of infringing its trademark and copying its source code, and Dominion Voting Systems, which accused TMTG of spreading false claims about the 2020 presidential election. TMTG has denied the allegations and vowed to fight the lawsuits.