Benzinga | Nov 9, 2021 11:22AM EST

Donald Trump Social Media Venture's SPAC Partner Seeks Investor Backing For PIPE Transactions: Report

Digital World Acquisition Corp (NASDAQ:DWAC), a special purpose acquisition company associated with Trump Media & Technology Group (TMTG), reportedly reached out to investors for the purposes of obtaining backing for private investment in public equity (PIPE) transactions. TMTG was launched by former President Donald Trump.

What Happened: The talks with the pitched hedge fund investors are still at an early stage, Reuters reported, citing people familiar with the matter.

The news of the merger between Digital World and TMTG was reported last month. At the time, TMTG said it planned to launch a social network dubbed "TRUTH Social" as well as a subscription video-on-demand service called "TMTG+."

TMTG said its aim was to create a "rival to the liberal media consortium and fight back against the 'Big Tech' companies of Silicon Valley."

Digital World shares have risen 500% since the news connecting the two companies emerged.

On Monday, Digital World shares closed nearly 5.8% higher at $59.85 in the regular session and fell almost 0.4% in the after-hours trading.

See Also: How To Buy Digital World Acquisition (DWAC) Shares

Why It Matters: Digital World intends to sell PIPEs at over the $10 per share level while most PIPEs for SPACs are sold at $10 per share, noted Reuters.

It should be noted that PIPE is usually a process through which private investment firms, mutual funds, and others purchase a publicly-traded stock at a price below the current market value.

The Digital World-TMTG merger would give the company an initial enterprise value of $875 million, a potential additional earnout of $825 million could take its value to $1.7 billion.

TMTG shareholders would own 69% of the merged company initially, as per a filing made with the U.S. Securities and Exchange Commission.

The SPAC merger has provisions for a "material disruptive event" which is listed to include the company principal running for public office or a personal conviction of a felony criminal offense.

SPAC King Chamath Palihapitiya said last month the potential merger was a huge "f-- you to traditional mainstream media."

Read Next: The Congress Member Who Bought Shares Of Trump's SPAC Probably Won't Surprise You

Photo: Courtesy of Gage Skidmore via Wikimedia