In a deal that could make former President Donald Trump billions of dollars richer, his social media network, Truth Social, is set to merge with a public company in a deal that would value it at approximately $5 billion. With a roughly 60% ownership stake in the company, Trump would have paper gains of some $3 billion, though it is unclear how quickly he would be able to access those funds.
The announcement came just a day after media reports revealed a joint fundraising agreement that the former president has struck with the Republican National Committee (RNC), which will funnel money to a political action committee that is paying Trump's personal legal bills.
The back-to-back revelations come at a time when the former president's finances, both personal and campaign-related, are very much in the news.
Trump is facing a deadline next week to deliver a $454 million bond to a New York state court, where he was found guilty of persistent fraud in his business practices. Trump has, so far, been unable to find a lender willing to extend him the necessary credit to post the bond, which he must do while he appeals the trial court's ruling.
At the same time, campaign finance reports have revealed that Trump's campaign is running significantly behind that of President Joe Biden when it comes to raising money for the 2024 presidential election, now less than eight months away.
'SPAC' deal
The merger agreement announced Friday is between Trump Media & Technology Group, which owns Truth Social, and Digital World Acquisition Corp., a public company with shares trading on the Nasdaq stock exchange.
Digital World is what is known as a special-purpose acquisition company, or SPAC. It was created in 2021 as a publicly traded company with no business activities of its own, but as a vehicle for acquiring privately held companies and transforming them into public companies. It announced its intention to merge with Trump's media company in late 2021, but the process has been lengthy.
Since its creation, Digital World has been the subject of controversy, paying millions of dollars to settle Securities and Exchange Commission charges that it prematurely negotiated the deal with Trump Media, even as three investors, one of whom was a member of the SPAC's board of directors, were charged with insider trading.
The merged companies will retain the Trump Media name and will trade on the stock exchange under the ticker symbol DJT, the former president's initials.
Trump's share
While the merger, when it is finalized, could make the former president as much as $3 billion richer on paper, it is not clear that he would be able to use those funds to meet his legal obligations in the near term.
Under the terms of the deal, Trump faces a six-month restriction, during which time he will not be allowed to sell his shares in the company or offer them to a lender as collateral for a loan. However, that restriction could be lifted by the company's board of directors.
In addition, the lofty valuation of the new entity largely depends on the willingness of investors to continue purchasing shares in the company at its current valuation, which was $36.94 per share when markets closed Friday.
Digital World's valuation has fluctuated wildly since its founding, nearing $100 per share in 2022, before dropping below $13 last summer. The stock's closing price Friday was down nearly 14% from the day before, with the movement broadly understood to be a reaction to the deal's announcement in the morning.
Were Trump to be seen selling off his own stake in large volume, that could trigger an investor exodus, dragging down the share price and lowering the value of the former president's holdings.
Trump-RNC arrangement
Over the weekend, The Associated Press first reported the structure of a new joint fundraising committee that the Trump campaign and the Republican National Committee have agreed to form, known as the Trump 47 Committee. Major party nominees and national party organizations typically enter joint fundraising agreements in presidential election years, but one feature of this one is uncommon.
Under the terms of the agreement, the first $6,600 of any donation will go directly to Trump's campaign, which faces limits on how much money it can accept from any individual donor. The next $5,000 will be funneled to Save America, a political action committee that has been spending millions of dollars every month to cover Trump's legal expenses, as he faces four separate criminal trials and multiple civil actions.
Only after the first $11,600 has been allocated does donor money begin to flow to the RNC. However, that still leaves the party in a position to collect large amounts of cash from donors. All told, individual donors will be legally allowed to give as much as $814,600 to the joint committee.
In cases where donors give the maximum, the RNC would take the next $413,000. The remainder would be divided among state-level Republican Party organizations.
Common arrangement, uncommon feature
Robert Boatright, a professor of political science at Clark University studying campaign finance, told VOA that there is nothing unique about the overall structure of the joint fundraising committee.
"You can construct a joint fundraising committee any way you want," Boatright said. "It's a way to get large checks from somebody, and it can be divided up according to some particular formula. So, if there are campaign contribution limits that apply to some of the entities within it, you can make sure you max out [donations] to those and spread money around [in] other ways."
He added, "The structure is not unusual. Of course, the fact that it will potentially be used to pay his legal bills is unprecedented."
Trump trails in fundraising
The formalization of the fundraising agreement comes as the Trump campaign and the GOP are both preparing to start soliciting money in earnest. According to the latest Federal Election Commission filings, released Wednesday, the Biden campaign had $71 million in cash on hand, more than twice as much as the $33.5 million in Trump's coffers.
Brendan Glavin, the deputy research director for OpenSecrets, an organization that tracks money in politics, told VOA that the fact Trump is trailing Biden isn't particularly surprising. While Biden is an incumbent president and has been his party's standard-bearer since 2020, Trump had to prevail in the Republican primary before he could consolidate the RNC's efforts behind his campaign.
"We're still in an early phase of this general election period," Glavin said, adding that, historically, presidential election fundraising levels continue to increase through the end of the campaign.
"Generally, when you get into the fall, you know, you're talking about raising $100-plus million a month — amounts that make what they're doing right now seem small," Glavin said. "The intensity of it and the volume of the fundraising really ramp up. So there's room to make it up."
