The potential obstacle to the Trump Media merger appears to have been removed

The threat of a last-minute obstacle to the merger of former President Donald J. Trump’s social media company and a cash-rich shell company appears to have subsided.

Two early founders of Trump Media & Technology Group reached a temporary truce with Mr. Trump’s company during a hearing in the Delaware Court of Chancery on Saturday morning. The agreement would preserve the two founders’ right to a significant equity stake in Truth Social’s parent company until a judge hears further arguments on the merits of their lawsuit.

The lawsuit, filed on February 28 by a company controlled by Wes Moss and Andy Litinsky, had the potential to upset a planned March 22 vote by Digital World Acquisition Corp. shareholders. about the long-delayed merger with Trump Media.

If shareholders approve the merger, it would provide Trump Media with more than $300 million in much-needed cash to continue operating. The deal would also increase Trump’s net worth by more than $3 billion, based on Digital World’s current stock price.

“No one is suggesting that I do anything to disrupt the shutdown,” Delaware Chancery Court Vice Chancellor Sam Glasscock III said of the shareholder vote. He later added, “I’m pretty sure we can accomplish something.”

The agreement was reached just days after another Delaware Chancery Court judge declined to delay the merger in response to a lawsuit filed by a company controlled by Patrick Orlando, Digital World’s former CEO and original sponsor from the shell company known as a special purpose acquisition company.

Mr. Orlando, Mr. Moss and Mr. Litinksy were early participants in conversations that ultimately led to the announcement of a proposed merger between Trump Media and Digital World in October 2021. But the deal was postponed in part due to an investigation by the Securities and Exchange Commission in these negotiations, which took place before Digital World went public in September 2021.

Last summer, Digital World agreed to pay $18 million to the SEC as part of a settlement to resolve the investigation. Regulators had said these early merger talks violated federal securities laws because they were not properly disclosed to investors. Special purpose companies, or SPACs, are not supposed to make a deal before raising money from the public.

Mr. Moss and Mr. Litinsky were contestants on Mr. Trump’s reality TV show “The Apprentice.” Shortly after he left the White House in January 2021, the two men spoke with Mr. Trump about starting a social media company.

They allege in their lawsuit that Trump Media has a plan to severely dilute their equity stake in the company they control, United Atlantic Venture, by issuing more shares. But a lawyer for Trump Media said during the hearing that the company has no such intention.

Vice Chancellor Glasscock said that if that were true, “maybe everything disappears.”

The possible merger comes as Trump is about to finalize the Republican nomination for president. It also comes as he faces a deadline to pay a $454 million fine imposed on him by a New York judge in a civil fraud case. Mr. Trump also faces mounting legal bills as he defends himself against charges in four criminal cases.

After the merger, Trump would own approximately 79 million shares in a publicly traded company. But a provision in the merger agreement currently prevents him from selling those shares to raise cash for six months.