Trump Spac merger: Vote count drama highlights tricky situation

Whether in politics or business, vote counts linked to Donald Trump create drama. For nearly a year, the former US president’s business venture, Trump Media and Technology Group, has planned to go public via a blank check vehicle. The deal is currently stalled in the usual US regulatory review.

The special purpose acquisition company cannot afford to wait any longer. His original legal documentation had called for the deal to be completed this month. Spac has furiously attempted to win a shareholder vote for a one-year extension, but has so far been unsuccessful. Only a last-minute cash injection of $3 million from Spac’s sponsor provided a three-month reprieve. Otherwise, nearly $300 million in the pot would go to Spac shareholders.

These investors are expecting $10.30 per share, the $10 par value of Spac stock plus earned interest. But stock prices can act as opinion polls. Despite the probable liquidation price, shares of the Spac, known as the Digital World Acquisition Corporation, are still trading at more than $20 per share.

Shares of DWAC soared as high as $97 on enthusiasm for Trump’s Truth Social app, a Twitter-like social media service. But mere loyalty to one’s cause does not bring business. The Trump Media Group has struggled to gain traction in a year in which established rival brands such as Meta and Snap suffered declines in ad revenue. Valued at $875 million a year ago, that seems unrealistic for the Trump Media Group today, at least on traditional valuation metrics.

To be sure, Trump supporters could drive Spac’s stock price higher beyond financial fundamentals. But not unless the Spac deal itself overcomes procedural hurdles. In its last quarterly filing, the DWAC Spac said less than $3,000 in cash. The FT reports that it has so far failed to pay the consultant who rounded up the votes it needed to proceed. Devotion alone does not pay the bills.

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