FILE PHOTO: Former President Donald Trump speaks to his supporters during the Save America Rally at Sarasota Fairgrounds in Sarasota, Florida, U.S. July 3, 2021. REUTERS/Octavio Jones/File Photo
December 2, 2021
By Krystal Hu
(Reuters) – President Donald Trump’s new social media venture is looking to raise up to $1 billion by selling stock to hedge funds and family offices at several times the valuation it came out in a deal with a company that bought back blank checks in October, two people familiar with the matter said.
Trump Media & Technology Group, which has yet to launch the social media app it says it’s developing, is poised to receive $293 million if it goes public in New York through a merger with the company. Digital World Acquisition Corp.’s blank test is complete. .
The deal costs Trump Media $875 million, including debt. Trump Media is now looking to raise an additional $1 billion at a valuation of nearly $3 billion, to reflect the rally in Digital World shares after Trump supporters and traders monetized it. buy shares, sources said.
It is the clearest sign yet that Trump and Digital World traders are looking to capitalize on the market euphoria surrounding their venture, which has so far been fueled by ambitious goals rather than a running business.
Digital World shares are valued at $10 per share in a deal with Trump Media. Trump Media is currently looking to secure a private investment in public equity (PIPE) that could value Digital World shares close to their recent prices, sources said.
The sources added that Digital World shares could be valued at a 20% discount from their 10-day average price, based on their volume.
The sources requested anonymity because the matter was confidential. Trump Media and Digital World did not respond to requests for comment. Bloomberg News reported last month that companies were looking to raise a PIPE without any details on its terms.
Digital World shares soared on Wednesday, as investors welcomed the news that PIPE could dilute existing Digital World shareholders less than they expected by pricing in much higher than the usual $10 per share seen in most mergers with blank check companies.
Shares, which had traded 6% lower before the $1 billion news, rose 7% at $44.35 on Nasdaq, then extended gains in after-hours trading, rising 31% to $58.01.
Most PIPE deals are done before a deal to take a company goes public, and it’s far from certain that companies will raise the full $1 billion they’re looking for. announce their agreement. Many Wall Street firms have passed up investment opportunities and many of the investors involved in the clandestine routes to PIPE are hedge funds, family offices, and high net worth individuals, sources news said. The family office manages the assets of the very rich and their relatives.
Weighing in on the deal’s appeal is the reluctance of many Trump-affiliated investors after he was banned on leading social media platforms for encouraging his supporters to participate in the attack. 6 to the U.S. Capitol, based on unfounded claims of widespread fraud during last year’s presidential election.
Several hedge funds backing Digital World’s launch, including Saba Capital Management and Lighthouse Investment Partners, said they were selling their stakes to move away from the Trump deal.
The deal also faces legal risks. U.S. Senator Elizabeth Warren asked Securities and Exchange Commission Chairman Gary Gensler last month to investigate the planned merger because of potential violations of securities laws around disclosure. . The SEC declined to comment on whether it plans any action.
Trump Media and Digital World asked investors to complete commitments to PIPE by mid-December, the sources said.
During a PIPE sugar show attended by one of the sources, investors were asked to commit between $10 million and $20 million. Neither Trump nor Digital World executives appeared, and the investor presentation was led by David Boral, president of EF Hutton, an investment bank that advised Digital World on the deal. , the source said. A representative for Trump Media was also present, the source added.
But Trump has personally involved. He has appealed to several investors to ask them to make commitments to PIPE of more than $100 million, the second of the sources said.
Investors attending the road show were shown a demo from the planned social media app, called TRUTH Social, which looks like a Twitter feed, the sources said.
Trump has said he is launching his own social media app to stand up to companies that have banned him from their platforms. He had 89 million followers on Twitter, 33 million on Facebook and 24.5 million on Instagram at the time he was blocked, according to a presentation on his company’s website.
Since Trump was voted out of office last year, he has repeatedly suggested he could seek the presidency for a third time in 2024.
Special-purpose acquisitions like Digital World had lost much of their traction with retail investors before the Trump media deal was born. Many of these investors suffered massive losses after companies incorporated with SPAC failed to deliver on their ambitious financial projections.
TRUTH Social is scheduled for full release in the first quarter of 2022 and is the first of three phases in the Trump Media plan, followed by a video-on-demand subscription service called TMTG+ that will be available. entertainment, news and podcasts, follow to news release.
In a slideshow on its website, the company envisions eventually competing with Amazon.com’s AWS cloud service and Google Cloud.
(Reporting by Krystal Hu in New York Additional reporting by Echo Wang in New York Editing by Greg Roumeliotis and Leslie Adler)
https://www.oann.com/exclusive-trumps-social-media-venture-seeks-1-billion-raise-sources/?utm_source=rss&utm_medium=rss&utm_campaign=exclusive-trumps-social-media-venture-seeks-1-billion-raise-sources Trump’s Exclusive Social Media Venture Seeks $1 Billion Funds