[ad_1]
Shares of Digital World Acquisition Corp., the well-funded shell company that plans to merge with former President Donald Trump’s social media company, plummeted Monday, a day after Florida Gov. Ron DeSantis withdrew from the race. It has soared by up to 70%. He secured the Republican presidential nomination and moved Trump even closer to winning the nomination.
The gains reflect investor enthusiasm for the beleaguered Trump Media & Technology Group, which has been attempting to merge with special acquisition vehicle Digital World since 2021. Digital World raised about $300 million in an initial public offering in September 2021, which Trump needs to operate its business.
Digital World’s stock price has already more than doubled since Trump’s victory in the Iowa caucuses on January 15, with the SPAC trading at about $44 per share, its highest price since spring 2022. being traded.
“Now that Trump is seen as the de facto Republican nominee, that momentum will naturally take over,” said Christy Marvin, a former investment banker and founder of SPACInsider, which collects data on the SPAC market. “In a way, it’s a barometer of how he’s doing in the race.”
The surge in Digital World’s shares, which are mostly owned by about 400,000 individual investors, comes as Truth Social inches closer to completing its long-delayed merger with parent company Trump Media. . The online platform has become Trump’s personal megaphone for bashing his critics, political opponents, and state and federal prosecutors pursuing criminal and civil cases.
Truth Social, which has about 7 million users, earned about $3.3 million in revenue in the first nine months of 2022, mostly from advertising, according to regulatory filings. During the same period, Trump Media lost approximately $49 million. The company had little cash on hand at the end of September and had used up most of the $37 million in private funding it had raised since 2021, the filing said.
Trump Media’s treasurers said the social media company cannot continue as a “going concern” without an influx of capital. For this reason, it is essential for Mr. Trump, who will be the company’s largest single shareholder after the merger, to conclude a contract with Digital World.
A Trump Media spokesperson did not respond to a request for comment.
The pending merger between Digital World and Trump Media, announced in October 2021, had been delayed due to a Securities and Exchange Commission investigation into the companies’ early deal negotiations ahead of the SPAC’s initial public offering. .
Last summer, Digital World paid an $18 million fine to the SEC and changed its corporate filings after securities regulators alleged that early deal negotiations with Trump Media ignored merger laws governing SPACs. It was agreed to revise the section. The deal was also pending an investigation by federal prosecutors that led to insider trading charges against three investors connected to Digital World.
With those investigations concluded, Digital World and Trump Media announced in December that the companies hoped to complete the merger by the end of March. However, the SPAC is still waiting for the SEC to complete its review of its merger agreement with Trump Media, known as S4. Digital World on Monday filed a third amendment to its merger agreement, which included a version of the proxy vote required of shareholders to approve the merger.
Digital World announced last week that it was in talks with some investors to raise an additional $50 million to fund the combined company. The company has been in talks with these investors, primarily hedge funds, about selling interest-bearing promissory notes that would be converted into company stock, but nothing has materialized yet.
[ad_2]
Source link
