Friendly Ice Cream Corporation (AMEX:FRN) share moved up $1.87, or 15.71%, to $13.70 today after the company announced that it retained Goldman Sachs to assist the Board of Directors in exploring strategic alternatives to enhance shareholder value, including a possible sale of the company. We first began covering FRN back in November and again in December when we noted that the Lion Fund had established a stake in the company and sought to unlock value through a possible sale. Since then, the stock has risen more than 30% including today's 15% gain as the company finally agreed with the company. Now, many investors are betting that the company will put itself up for sale with Mr. Biglari of the Lion Fund being a potential bidder.

This story was one of the more interesting fights we've seen between shareholders and management. Shareholders first established a group to fight the company, complete with a website: http://www.enhancefriendlys.com. Shortly thereafter, the shareholders took things even further by putting up billboards near the company's headquarters publicizing the fact that their company needed fixing. The giant billboards claimed that two board candidates they proposed are "Good for Employees, Franchisees, Shareholders". This campaign - designed to target ordinary investors - was clearly designed to cut into day-to-day operations. And while the campaign wasn't unprecedented, it was certainly unusual by any standard! Regardless, FRN continues to be a stock worth watching as the company mulls its options.

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Take-Two Interactive Software, Inc. (NADQ:TTWO) shares moved up $2.86, or 16.24%, to $20.47 after several investors collectively holding 46% of the company's outstanding shares reached an agreement with the company to vote in a new slate of six directors, according to a Schedule 13D filed today with the SEC. The investment group consists primarily of OppenheimerFunds, SAC, Tudor Investment, DE Shaw Valence and ZelnickMedia. The new nominees for the Board of Directors include former BMG Entertainment CEO Strauss Zelnick, former News Corp executive Benjamin Feder, Jon Moses, Michael Dornemann and Michael Sheresky. Many analysts and investors are predicting that the proposed management change would have a positive impact on the company, after it suffered losses for the past four quarters.

What does the group aim to accomplish? Well, they started by asking the company to grant them the power to replace the current Chief Executive Officer and review the current Chief Financial Officer. Secondly, the group setup a "Management Agreement" whereby ZelnickMedia will receive a monthly management fee of $62,500, an annual bonus of up to $750,000, an option to purchase 2.5% of the company's common stock on a fully diluted basis, and shares of restricted stock. Not to mention the company will be forced to reimburse ZelnickMedia for all expenses related to the Management Agreement and other related transactions. Will the costs be worth it? Well, given the poor performance we're seeing from current management along with the recent options backdating scandal, many investors are willing to take the chance. TTWO is definitely a stock worth watching as the new management team attempts to turn around the company!

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Cost-U-Less, Inc. (NDAQ:CULS) announced yesterday that it entered into separate letter agreements with two activist hedge funds that have been pushing for changes. Delafield Hambrecht and Chadwick Capital Management reached an agreement with the company whereby the company would nominate and support John D. Delafield for election to the company's Board of Directors in 2007 and submit a proposal to remove the requirement that a business combination be approved by holders of at least 2/3 of the oustanding common stock under certain circumstances. Meanwhile, the two hedge funds agreed to support the slate of directors nominated by the company and not propose any other business or conduct a proxy solicitation at the 2007 annual shareholders meeting.

We first took note of this company back in December when Monarch Activist Partners suggested that the company put itself up for sale in a Schedule 13D/A filing with the SEC. About a month later Delafield Hambrecht issued a similar demand in their own Schedule 13D/A filing, reasoning that CULS is worth at least $12 per share. Delafield even hinted that they would be a potential bidder in the event of a sale, although admitted that a strategic buyer would likely be willing to pay more. Shortly thereafter, the company responded by saying that it had contacted several investment bankers and other advisors in order to help them explore strategic alternatives. Interestingly, the latest advisor that they hired happens to be Cascadia Capital - a Seattle-based investment bank with a nationally recognized M&A advisory practice. With a fresh new seat on the Board of Directors and less stringent business combination requirements, the odds of a sale taking place just greatly increased! This makes CULS a stock worth watching closely!

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