Donald Trump's Digital World Acquisition merger gets the SEC's approval

The backstory: Donald Trump, a prominent figure in American politics and business, served as the 45th President of the US from 2017 to 2021. Known for his unconventional approach and controversial policies, Trump had a relatively successful career before that in real estate and on TV, notably developing Trump Tower in New York City and starring in the reality show "The Apprentice." And, after his presidency, Trump stayed active, launching Truth Social as an alternative to mainstream social media platforms. This came after he was banned from major ones like Twitter (now known as X) following the Capitol attack by his supporters in 2021. Truth Social is managed by Trump Media & Technology Group (TMTG).

Now, onto the business side of things. Digital World Acquisition, a company specifically set up for acquiring other businesses, teamed up with TMTG in late 2021 for a merger. But Digital World faced some hurdles over the deal, with investigations by the US Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) as well as executive and board shakeups.

More recently: Over the weekend, Trump was fined US$355 million by a New York judge for allegedly inflating his property values. This ruling also put a three-year ban on Trump doing business in the state, though it didn't completely shut down his family business. Trump denies any wrongdoing and plans to appeal, which means the decision is on hold until a higher court weighs in. All this is happening alongside other criminal cases Trump is facing while he’s also campaigning to run for president again in November.

Over the weekend, Trump launched his own line of Trump-branded shoes at Sneaker Con in Philadelphia. The response from the crowd was mixed – some cheered, while a lot of others booed – as he revealed the gold-colored shoes, priced at US$399 online. But the shoes did sell out in just a few hours.

The development: The US SEC has given the thumbs up to the merger, so Digital World can now set a vote for its shareholders to complete the deal. Digital World’s shares rose 16% in afternoon trading on Thursday following the news. With that, assuming shareholders hold on to their stocks through the merger, the combined company could be worth around US$10 billion. If all goes well, Trump might end up owning more than half of this new company, depending on investor support. So that’s a pretty nice chunk of money for him, which might help take the edge off his most recent legal fines. But, depending on how his potential presidential campaign pans out, Trump might distance himself from Truth Social, according to Digital World.

Key comments:

“We are immensely proud of the strides we’ve taken towards advancing the business combination ...This achievement marks a significant milestone for us,” said Digital World Acquisition’s CEO Eric Swider in a press release.

“Orlando may use his control over the Sponsor and the majority of the Founder Shares as leverage to raise further demands,” the filing said, referring to former Digital World CEO Patrick Orlando and his connection to the company’s sponsor, Arc Global Investments.

“Whether it’s Republican or Democrat or liberal or conservative, it would be so nice if we could come together and straighten out the world and straighten out the problems and straighten out all of the death and destruction that we’re witnessing that’s practically never been like this,” said Donald Trump last month after his victory in the Iowa caucuses.