SEC greenlights plan to take Trump’s Truth Social public in a deal worth about $10bn

The U.S. Securities and Exchange Commission has approved the merger between Donald Trump's media and technology company and a blank-check acquisition vehicle, valuing the parent company of his Truth Social app at up to $10 billion.

This valuation, though significant, is notably lower than that of Elon Musk's social media giant, X. 

Despite facing setbacks over the past two years in their pursuit of a stock market listing, the deal has gained traction recently, with the company's value surging more than threefold since January amid Trump's increasing prominence in Republican circles.

Under the terms of the merger, Trump stands to own between 58.1% and 69.4% of the combined entity, contingent on investor support for the deal. However, there's a possibility that Trump may divest his stake and step away from management involvement depending on the progress of his presidential aspirations.

The approval from the SEC comes amidst a backdrop of various challenges faced by the merging parties, including investigations by the U.S. Department of Justice, leadership changes within the company, and a settlement with the SEC over disclosure discrepancies.

While the merger's approval is a significant milestone, there are still hurdles to overcome. Former Digital World CEO Patrick Orlando, instrumental in the company's formation, could pose a challenge by seeking additional compensation. Additionally, financial disclosures reveal that significant borrowing has funded operations, and the company may issue convertible notes to avoid liquidity issues.

Financial data disclosed indicates a growth trajectory for Trump's media venture, with revenue increasing substantially from the previous year. However, operational losses persist, highlighting ongoing challenges in achieving profitability.

Looking ahead, Trump's close associates, including Kash Patel, W. Kyle Green, Linda McMahon, Robert Lighthizer, and Don Jr., are slated to join the board of directors post-merger, with former U.S. lawmaker Devin Nunes serving as the chief executive.