JEFF CHARLES, RED STATE:
END OF THE LINE FOR TRUTH SOCIAL? MERGER WOES THREATEN TRUMP'S MEDIA
Truth Social might be in a bit of trouble. And when I say a bit of trouble, I mean the platform could be shutting down altogether if the stars do not align. The company, established in October 2021, is reportedly on the brink of collapse due to its troubles merging with Digital World Acquisition Corp.
The platform was meant to become a tech behemoth worth up to $1.7 billion. But with the deal in jeopardy, this might not come to fruition:
When former president Donald Trump’s media start-up announced in October 2021 that it planned to merge with a Miami-based company called Digital World Acquisition, the deal was an instant stock-market hit.
With the $300 million Digital World had already raised from investors, Trump Media & Technology Group, creator of the pro-Trump social network Truth Social, pledged then that the merger would create a tech titan worth $875 million at the start and, depending on the stock’s performance, up to $1.7 billion later.
All they needed was for the merger to close — a process that Digital World, in a July 2021 preliminary prospectus, estimated would happen within 12 to 18 months.
“Everyone asks me why doesn’t someone stand up to Big Tech? Well, we will be soon!” Trump said in a Trump Media statement that month.
Now, almost two years later, the deal faces what could be a catastrophic threat. With the merger stalled for months, Digital World is fast approaching a Sept. 8 deadline for the merger to close and has scheduled a shareholder meeting for Tuesday in hopes of getting enough votes to extend the deadline another year.
If the vote fails, Digital World will be required by law to liquidate and return $300 million to its shareholders, leaving Trump’s company with nothing from the transaction.
The deal has been fraught with challenges having been postponed six times. The issues include scrutiny from the Securities and Exchange Commission (SEC), allegations that Digital World engaged in early conversations in violation of rules governing special purpose acquisition companies (SPACs), and a slew of
internal problems, such as the termination of the chief executive and insider trading allegations against a former board member.
If the vote for another extension fails, Digital World will be compelled to liquidate and return $300 million to shareholders. This would leave Trump’s company with empty pockets.
SPACs, also known as “blank check companies,” are investment vehicles that allow investors to invest in private equity-type transactions.
Investors set up these entities with the purpose of pursuing deals in certain industries. The only purpose of this type of business is to raise capital through initial public offerings (IPO) to acquire existing businesses.
Digital World’s funding consists largely of small-time retail investors, which makes it difficult to get sufficient participation in critical votes. Trump Media blames the SEC for the myriad of delays, accusing it of political sabotage.
@MMA
I own some DWAC stock. I voted my shares. It's probably going to crash and burn, I have already resigned myself to losing those funds. It's not a lot.
@Timtoolman
That's horrible for you and I'm sorry to read this.
Will Truth Social cease operations, do you think?
@MMA
I doubt it. It's not a good user experience though. The feed is not an easy read.
I don't find the atmosphere to my liking. That's why I'm rarely there.
@Timtoolman
I look at TS the same way that I look at the no- name gas station that is up the street. I rarely, if ever, go there myself, but I am glad it's there --because their low gas prices force the other gas stations' prices down too.
So I'm glad that TS is there, if only because real news is getting out now.
The MSM news, political hacks and X are getting all fact checked on TS. The C I A's stranghold on the news isn't blanketed or nearly as effective. TS is forcing more balance.