Trump tightens grip on social media company after SPAC deal success
October 27, 2021
By Anirban Sen and Krystal Hu
(Reuters) – Former U.S. President Donald Trump will be able to retain the ownership of his newly launched social media venture even if he chooses to make another White House run or is convicted by prosecutors who are looking into his business dealings.
Trump said last week that TRUTH Social would be created through a new company formed by a merger of the Trump Media and Technology Group (TMTG) and blank-check firm Digital World Acquisition Corp.
According to regulatory filings issued late on Tuesday, Trump was referred to as the “company principal,” even though the exact size of his stake in the company was not disclosed.
However, the former president is set to keep his ownership in TMTG, even if the company faces a “material disruptive event” – the latest filings include a clause that is designed to shield his stake.
“In order to maximize business continuity and to minimize, mitigate, or eliminate any negative impacts on the Company from a Material Disruptive Event, the Company Principal’s ownership and position in the Company shall be structured in such a way as to eliminate the need for restructuring of ownership or changes in position were a Material Disruptive Event to occur,” according to the filing.
Since Trump was voted out of office in the last presidential elections in 2020, he has repeatedly dropped hints that he might seek the presidency for a third time in 2024.
Trump and his business interests are also the subject of numerous investigations from U.S. authorities – in June, Trump’s namesake company and its chief financial officer were indicted, the first charges to arise from a more than two-year probe by New York prosecutors of Trump and his business dealings, Reuters reported.
In the latest filings, DWAC highlighted the risks of being associated with Trump’s company.
“The Purchaser hereby acknowledges the controversial nature of being associated with the Company Principal and the Company Principal’s family,” it said.
As part of an earnout clause in the deal, TMTG shareholders will receive an additional 40 million shares, based on the share price performance of DWAC, which on Tuesday closed down nearly 30% but are still trading well above the SPAC’s IPO price of $10 a share.
Earlier in October, Reuters reported that the merger with TMTG has delivered a potential windfall of $420 million for DWAC’s main backer, Patrick Orlando, who has been trying for a decade to reinvent himself as a serial dealmaker.
(Reporting by Anirban Sen in Bengaluru; Editing by Stephen Coates)