Company eyeing Trump’s social network warns investors
Special-purpose acquisition company Digital World Acquisition Corp (DWAC) has alerted potential investors that the man behind its prized product, former US President Donald Trump, has been associated with a long list of failed businesses ahead of a planned merger between the company and Trump Media & Technology Group.
DWAC, which has raised over $1 billion ahead of the deal, detailed the risks to investors in a merger document released on Monday ahead of the long-delayed merger. “A number of companies that were associated with President Trump have filed for bankruptcy,” the filing warns, mentioning Trump University, Trump Vodka, Trump Steaks, Trump Shuttle, and Trump Mortgage. TMTG ‘only’ lost about $59,000 last year, according to the filing.
Additionally, the company reminded those interested in owning a piece of the real estate mogul-turned-politician that Trump was “involved in numerous lawsuits and other matters that could damage his reputation.” Indeed, the primary reason the formerly Twitter-addicted Trump launched the TRUTH Social platform was his removal from every other major social media site following the January 6 Capitol riot in 2021.
The SEC could still “disapprove this transaction,” the filing warned, adding that DWAC had not “obtained an opinion from an independent investment banking firm” regarding the financial health of the deal, and “you may be unable to ascertain the merits or risks of TMTG’s operations.” A public accounting firm’s report “expresses substantial doubt about [DWAC’s] ability to continue as a ‘going concern,’” the filing states, while “some” company officers “may be argued to have conflicts of interest.”
The filing affirmed that Trump was “generally obligated” to post any commentary to TRUTH Social at least six hours before repeating the same post on any other site. The former president has 2.7 million followers on his network. While Trump initially planned to make his social media home on TRUTH Social, that was before newly-minted Twitter owner Elon Musk said he would restore the former reality star’s suspended account once the $44 billion deal to acquire the platform went through. Trump had a significantly larger following on Twitter, boasting nearly 89 million followers before his account got the axe for allegedly inciting violence.
Additionally, the ex-president’s obligation to post primarily to TRUTH Social apparently does not cover “political messaging, political fundraising, or get-out-the-vote efforts,” a loophole he could potentially exploit to return to Twitter if he so desired. Trump has endorsed several candidates for the 2022 midterm elections, and posts supporting them or even alluding to their campaigns could be considered “political messaging.”
DWAC has been planning to merge with Trump Media & Technology Group since October. However, the deal has been beset by concerns from market analysts that the company was too highly valued and dogged by complaints about TRUTH Social’s glitchy rollout. Backed by Shanghai-based investment firm Arc Group, the SPAC initially valued Trump’s company at $875 million, suggesting a “potential additional earnout” of $825 million, making its total value a whopping $1.7 billion.
Following the merger, the newly-public company will officially change its name to Trump Media & Technology Group Corp.