Trump Media near all-stock deal to buy crypto platform Bakkt

A takeover would represent the Trump Media and Technology Group’s (TMTG) first venture to branch out from Truth Social, the upstart social media platform. 

Shares of both TMTG and Bakkt jumped after the FT report. Bakkt closed up 163%, and TMTG stock was up 16% on the day. In after-hours trading, Bakkt climbed another 17% while TMTG slipped 3.5%.

ICE declined to comment. TMTG and Bakkt did not immediately respond to a request for comment.

Bakkt was founded in 2018, by Intercontinental Exchange (ICE), the company that also owns the New York Stock Exchange. ICE currently owns about 55% of Bakkt, which has market cap of around $150 million dollars.

By comparison, TMTG is now valued at about $7 billion as shares soared after Trump won the presidential election. An all-stock deal would allow the company to use its valuable shares to expand.

But both companies have seen their operations struggle this year. In February, Bakkt issued a “going concern” warning, meaning it is unsure it will have enough money to keep operating. In March, Bakkt disclosed it had been notified by the NYSE that it was at risk of being delisted from the stock exchange because its stock had traded below an average of $1 for 30 days.

Meanwhile, TMTG has yet to turn a profit, losing hundreds of millions of dollars, since it went public in March. Despite its poor performance, TMTG remains one of the most heavily traded stocks on the market, an indication that it is a meme stock that trades independent of is business fundamentals.

Bakkt’s former CEO was Kelly Loeffler, who stepped down when she was appointed as Georgia’s U.S. senator in December 2019. Loeffler now chairs Trump’s inaugural committee. Her husband Jeffrey Sprecher is the CEO of ICE.

Loeffler and Sprecher have long campaigned to get cryptocurrencies into institutional investors. Since the launch of Bakkt (which is a play on asset-backed security) the company has tried to get cryptocurrencies into retirement plans like 401(k)s and IRA accounts.

Bakkt launched with much fanfare, including an extensive feature in Fortune in which both Loeffler and Sprecher sat for interviews. The company had secured major investments from Microsoft, Starbucks, BCG, and a host of blue chip investment firms like Fortress Investment Group and Susquehanna International Group.

But as the crypto industry matured, more established players began to offer similar services, making it harder for Bakkt to carve out a space in the market. In July, Bloomberg reported the company was exploring being broken up or sold. Now it appears Bakkt has found a buyer in TMTG.

This would not be Trump’s first venture in the crypto industry. After launching in September, World Liberty Financial plans to operate as a decentralized finance platform, which allows users to borrow and lend crypto without a financial institution mediating the transaction. It also has plans to issue a token of its own. The Trump family will receive 75% of the tokens issued, with the remaining 25% going to their business partners.

TMTG’s expansion into another holding could have major implications for the president-elect’s net worth. Trump’s 53% ownership stake in TMTG is worth about $3.7 billion based on Monday’s stock price.