Truth Social parent company Trump Media & Technology Group announced a deal on Thursday to merge with nuclear fusion company TAE Technologies.
The surprise merger drove shares of Trump Media 28% higher before the market open.
The companies said the all-stock transaction is valued at more than $6 billion and will create one of the first publicly traded fusion companies.
After the deal closes, shareholders of Trump Media and TAE would own about 50% of the combined entity.
The news comes as Trump Media’s share price has plunged this year.Truth Social has struggled to gain traction, remaining a far smaller player than rival social media platforms.
Trump Media has announced efforts to diversify into artificial intelligence, crypto and asset management.
The promise of new energy source
Fusion has long held the promise as a source of clean, safe, and cheap energy.
It essentially is the quest to replicate on Earth the process that powers the sun and other stars. It involves fusing atoms together to create an exceptionally powerful burst of energy, achieved using the most abundant element in the universe: hydrogen.
This futuristic energy is seen as something of a clean energy holy grail as it is near limitless, produces no planet-heating pollution and unlike fission — the world’s current nuclear technology — it leaves no legacy of long-term nuclear waste.
Countries and private companies, like TAE Technologies, are racing to master fusion, but there are huge challenges to proving the process can work and taking it from the lab to commercial use. These are very expensive ventures that rely on fundraising until they can prove fusion is successful – which is likely still years, or even decades, away.
Fusion companies raised more than $2.6 billion in the first seven months of this year, according to the Fusion Industry Association, with backing coming from a wide range of investors. But it still falls far short of the amount companies say they need to bring their first pilot plants online.
Although researchers have made advances in laboratories, fusion has yet to provide energy on a commercial scale.
But TAE says it is poised to be able to do just that, with plans for to start construction of the first utility-scale fusion power plant in 2026 at a yet to be determined location.
An ‘arms race’ with China
“TAE has more than 25 years of R&D in the lab and safely built and operated five fusion reactors and importantly proven major energy and fusion breakthroughs over the years, putting TAE at the top of the mountain in the fusion global scene in our view,” said Dan Ives, tech analyst with Wedbush Securities, in a note Thursday.
“TAE will also clearly have major political support from President Trump in our view and this importantly will create a major nuclear fusion US energy domestic bet over the coming years,” he wrote.
Nuclear power has come back into vogue in recent years as artificial intelligence creates huge new demand for electrical energy to drive computers in data centers. Fusion or other sources of power could help with America’s electrical supply problems.
“It’s an arms race with China,” Ives told CNN. “The US facing major energy shortages/issues to fuel the AI data center transformational buildout over the next decade. While the US is ahead of China from an AI technology perspective, China is clearly leading on the energy front with a major surplus. If they’re a US answer for fusion, it’s TAE. The biggest thing missing is capital.”
Trump’s company taking ownership of TAE could give it political clout. But it could also make it more politically controversial for it to receive any kind of federal government support, such as grants, low. interest loans or permitting approvals.
While Trump Media and Technology Group is not profitable, it does have significant assets, especially from its crypto currency investments. Its balance sheet showed $1.5 billion in digital assets on the books and an additional $550 million in other short-term investments.
But that is a paltry amount compared to the cash on hand at various other major tech companies. For example, Google owner Alphabet has $95.7 billion in cash, cash equivalents and marketable securities on its balance sheet.
Alphabet is one of the investors in TAE already, according to data compiled by FactSet, along with Chevron, Charles Schwab, the government of Kuwait and Microsoft co-founder Paul Allen, who passed away in 2018, as well as a number of venture capital firms. Michael B. Schwab, founder and managing director of one of those venture capital firms, Big Sky Partners, is expected to be named chairman of the merged TMTG and TAE.
Devin Nunes, the CEO of Truth Media & Technology Group, will serve as co-CEO of the combined company with Michl Binderbauer, CEO of TAE. Nunes and Donald Trump Jr. will be two members from TMTG to join the nine-member board of the combined company.
“Fusion power will be the most dramatic energy breakthrough since the onset of commercial nuclear energy in the 1950s—an innovation that will lower energy prices, boost supply, ensure America’s AI-supremacy, revive our manufacturing base and bolster national defense,” he told Fox Business Thursday.
“TMTG brings the capital and public market access to quickly move TAE’s proven technology to commercial viability.”
By CNN
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