Expedia (NDAQ:EXPE) shares rose $3.65, or 14.31%, to $29.15 today after the company announced that it will repurchase about 42% of its own shares. The company will conduct the $3.5 billion offer via a modified Dutch tender auction later this month. Shareholders will be eligible to tender their shares at that time for between $27.50 and $30.00 a piece.

Expedia still has a wrecked balance sheet, but with 42% less shares available it will improve modestly. The trick is being able to successful tender the shares; after all, the stock rose to nearly $30 per share in today's trading. Few shareholders are likely to want to tender their shares for the lower end of the range, making it hard for the company to go through with all $3.5 billion in buyout cash. In fact, the same problem faced Brinker last year.

So, what does this all mean for shareholders? Well, trading at the upper end of the Dutch tender price range with a PE of more than 25x forward earnings in a difficult industry certainly should be reason enough to think twice about picking up shares of Expedia. While their intentions may have been goodhearted, we have yet to see how the execution will play out.

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