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Trump’s $3.2 Bn Truth Social Merger Might Be Nixed at the Last Minute By Legal Hurdles

As former President Donald Trump aims to take his Truth Social platform public through a significant merger deal, a flurry of legal challenges has emerged, throwing the completion of the transaction into uncertainty.

The impending shareholder vote, scheduled for later this month, faces disruption amid lawsuits surrounding the deal, posing obstacles to Trump’s anticipated windfall and complicating his mounting legal troubles.

Shareholder Lawsuits

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Former contestants on The Apprentice and co-founders of Trump Media & Technology Group, Andy Litinsky and Wes Moss, have filed a lawsuit in Delaware Chancery Court.

Scheme to Dilute Shareholding

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They allege a scheme by the company to dilute their 8.6 percent stake, adding to the legal entanglements surrounding the merger.

Merger Partner’s Woes

Credits: DepositPhotos – Truth social media on smartphone. Truth Social is Americas Big Tent social media platform owned by Donald Trump — Photo by rokas91

Concurrently, Digital World Acquisition, Trump Media’s partner in the merger, is embroiled in legal disputes over stock allocations with its former CEO, Patrick Orlando, intensifying the legal quagmire.

Significance of the Merger

Credits: Depositphotos – NEW YORK, USA – Sep 21, 2017: Meeting of the President of the United States Donald Trump with the President of Ukraine Petro Poroshenko in New York — Photo by palinchak

The merger between Trump Media and Digital World has assumed heightened significance for Trump, who faces substantial civil judgments exceeding $500 million.

Windfall of $3.2 Bn

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With a potential windfall of approximately $3.2 billion from over 78 million shares, the completion of the merger could offer a critical liquidity lifeline for Trump amid mounting legal and financial pressures.

Legal Maneuverings

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While Trump Media and Digital World remain silent on the lawsuits, legal wrangling intensifies as Litinsky and Moss’s lawyers seek expedited proceedings, citing the impending shareholder vote.

Trading Restrictions

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Although Trump stands to benefit from the merger, securities laws impose restrictions on his ability to cash out upon deal closure immediately.

Six-Month Lockup Period

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The terms of the agreement entail a six-month lockup period, barring Trump from selling large quantities of stock simultaneously.

However, avenues such as transferring the stock into a trust remain viable options.

Long-standing Challenges

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The merger between Trump Media and Digital World, announced over two years ago, has encountered several hurdles, including regulatory scrutiny.

The Securities and Exchange Commission’s lawsuit against Digital World last year and subsequent settlement highlight the regulatory complexities surrounding the deal, further compounded by the latest legal battles.

Market Response

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Investor interest in the merger has been evident through Digital World’s stock price fluctuations.

The company’s shares surged to their highest levels in nearly two years amid Trump’s growing prospects for the Republican nomination.

However, news of the lawsuits has dampened investor sentiment, leading to a decline in Digital World’s stock price in recent weeks.

Read More From The Stock Dork

Credit: DepositPhotos