PeopleSupport (NDAQ:PSPT) shares spiked nearly 10 percent today after IPVG Corp. upped its buyout offer to $17 a share or $385 million. The move comes after the company rejected a previous $15 per share offer, calling the offering price “inadequate” and complained that it failed to take into account the company’s strategic value and growth plan. Shareholders are hoping that the company will at least consider the new proposal, however, as it provides a further boost to the company’s shares.

IPVG sent a letter to PeopleSupport chairman and chief executive Lance Rosenzweig on Friday saying that it was “unfortunate” that PeopleSupport did not engage in serious discussions with the company “despite repeated attempts to have confidential dialogues regarding our proposal.” Some shareholders are clearly in support of a deal with shares rising close to the buyout price instead of surpassing it or falling below it in anticipation of rejection or in actual rejection of such a proposal.

Other shareholders believe that the company was correct in rejecting the $15 bid. Indeed, PeopleSupport revenues for 2008 are expected to be between $180 million and $190 million, which is higher than Wall Street estimates of $170 million. Offshore competitors for PeopleSupport are trading at about 2 to 3 times sales, which would translate to a valuation of around $18 per share, or $405 million for PeopleSupport. So, perhaps the new bid will get a little more attention.

Overall, PeopleSupport is like to continue seeing pressure from its largest shareholder who has pressured the company to conduct an auction to solicit other acquisition offers. Many are hoping that this offer will be at least considered by the company, however, given that it is close to the true valuation suggested by many analysts. Combined, these factors make PSPT a stock worth watching!

Related Companies
Sykes Enterprises (SKYE)
TeleTech Holdings (TTEC)
Convergys Corporation (CVG)