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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Nabi Biopharmaceuticals (NDAQ:NABI) may be in for a fight after nearly 40% of its ownership base filed Schedule 13Ds with virtually identical activist platforms - the conversion of the company into a royalty trust following a special dividend financed by divisional asset sales. Chapman Capital noted today that while the company has outlined plans to this end, they have yet to actually execute their plans and unlock shareholder value.

Just how much would this deal be worth for shareholders? Well, Chapman Capital estimated in their letter to the board that the divisional asset sale of Nabi Biologics alone should be able to return around $5/share - conveniently, around the price they averaged in at. The subsequent focus on developing the company's new drugs should provide a welcome boost for its shareholders. And finally, the change in structure to a royalty trust will greatly improve its financial ratios and subsequently their valuation.

In the end, activist hedge funds are circling this stock for a reason - there is substantial value that can be unlocked through a combination of divisional asset sales and a change in the company's overall structure. Many shareholders are banking on the stock at least doubling in the long-term following these efforts while simultaneously cashing out a hefty dividend from asset sales. Shareholders also have the comfort of knowing that they are supported by Chapman Capital, who has essentially threatened a proxy fight if the company doesn't follow through. All in all, this is definitely a stock worth watching!

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It's not too often that shareholders argue against the likes of George Soros, but in this case Bioenvision (NDAQ:BIVN) investor Steven Rouhandeh believes the billionaire is way off the mark. The company continues to support (along with Soros' funds) a buyout offer from Genzyme valued at $345 million - or $5.60 per share - and it has many investors quite upset.

Rouhandeh maintains that the current offer of $5.60 per share is very inadequate, representing a value of less than one-times forward revenues. The activist shareholder also argued that the timing of the deal is highly unfavorable as it comes in advance of an anticipated approval of clofarabine in the adult AML indication.

Rather than selling the company now at such a low premium, Rouhandeh suggested five steps aimed at creating far more value for a potential sale at a much higher multiple in the twelve to eighteen months range. These steps include:

1. Let the tender offer terminate: The market clearly believes the current offer is inadequate with more than 30 million shares trading above the buyout price. The buyout price also comes at an insignificant premium of only 7% and is not comparable to other industry acquisition multiples.
2. Reduce the influence of Soros at the board level: George Soros and his affiliates have managed to control 67% of the company's voting power while only owning 12% of the company's shares. New independent board members could help reduce this unhealthy balance.
3. Augment management with the recent proceeds from financing: Add additional personnel and others to augment management and enhance the odds of success, particularly with its upcoming new drugs.
4. Strengthen business development efforts: Expand business development efforts through in-licensing or through the acquisition of complementary products and technologies. Also, expand partnering and out-licensing agreements to enhance global presence.
5. Enforce Bioenvision's rights: Genzyme appears to be monopolizing the agreement between the two parties when in fact it is Bioenvision that is licensing rights to Genzyme. Force Genzyme to share its data with Bioenvision to help enhance the drugs.

Clearly, the current offer on the table is not one that most investors are happy with; however, management and the company's largest shareholder seem to remain in favor of the deal. Unless Rouhandeh can convince enough shareholders otherwise, the deal could go through. However in the event that the deal falls through, this is definitely a stock to keep an eye on over the next year.

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The Finish Line (NDAQ:FINL) announced an agreement to acquire Genesco (NYSE:GCO) for $54.50 per share in cash. Some investors are questioning the $1.5 billion acquisition, especially given the fact that Finish Line itself is only worth $600 million. The move will diversify the company's pure athletic product lines into such areas as casual dress and even footwear.

Finish Line said it expects to finance the transaction through $11 million in cash on hand and up to $1.6 billion in financing provided by UBS consisting of a revolving credit facility, a senior secured term loan and a senior bridge facility. Some investors believe this may be overburdening; however, the company is quick to note that it expects Genesco to be accreditive to earnings within the full year, before considering the incremental ammortization of the transaction.

So, what does this ultimately mean for Finish Line? Well, the company is clearly going to grow to a much larger size, but with larger size comes larger problems. The $1.6 billion in possible loans presents one of the most substantial problems and the company may consider selling or spinning off some of its new parts in order to lower its exposure. Regardless, this is a bold move that is definitely worth following as if properly executed, it could mean great returns for patient shareholders.

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North Pittsburg Systems (NDAQ:NPSI) shares moved up $0.68, or 3.49%, to $20.14 late Friday after Bulldog Investors disclosed a 7% stake in the company and again urged the company to put itself up for sale. The activist hedge fund argued that given CT Communication's recent buyout price, the company could fetch between $28.50 and $31 per share in the event of a sale.

Bulldog Investors noted their increasing concern regarding the accelerating consolidation in the RLEC industry that the lack of participation by North Pittsburg Systems. They insist that continuing to delay an inevitable sale of the company puts shareholders at risk of permanent capital loss. And with the recent weakness in NPSI's stock, the hedge fund believes that there would be many shareholders interested in a sale of the company for a 46 to 59 percent premium.

So, what does this mean for shareholders? Well, as Bulldog noted, the company's share price has been stagnant while companies around it have been acquired at substantial premiums. This means that many shareholders are likely willing to sell the company at the right price. Moreover, the activist hedge fund noted that while they would like to avoid a costly proxy contest, they cannot sit idly by while NPSI's value deteriorates. Combined, these factors make NPSI a stock worth watching closely over the next few months!

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Vitesse Semiconductor (OTC:VTSS) is facing some shareholder pressure recently after Chapman Capital disclosed a 5.3% stake in the company and demanded that it immediately hold an annual meeting to elect directors to the its board. The activist hedge fund also demanded that Jim Cole, head of the company's chief governance committee, immediately resign amid a series of scandals.

Vitesse has faced some extreme difficulties after being delisted from the Nasdaq Stock Exchange last year. These included an options backdating scandal along with a failure to produce more than two years of audited financial results. In fact, the last time shareholders were even permitted to vote on a slate of directors was nearly 17 months ago on January 24, 2006! Chapman Capital contends that one man stands behind the paper trail that led to this diseaster: Jim Cole.

Robert L. Chapman, Jr. commented, "Having conducted its own investigation of the Compensation Committee that seems to have approved the issuance of backdated stock options to former senior executives of Vitesse, Chapman Capital has followed a trail of circumstantial evidence and now finds itself on the doorstep of 20-year Vitesse director and Compensation/Audit Committees member Jim Cole.  Clearly, we are not alone in forming our opinion, with the majority of callers who spoke on Vitesse’s fourth fiscal quarter conference call referencing Mr. Cole’s prospective resignation from the Board.  Moreover, should the Vitesse Special Committee headed by former Teradyne senior executive Edward Rogas, Jr. have accumulated evidence that exposes Mr. Cole as having committed or been illicitly complicit in any criminal act, Chapman Capital demands that such information be turned over to federal authorities so that Mr. Cole may serve any prison sentence that may be dictated by the laws regulating such professional deportment."

So, where can Vitesse go from here? Well, if Jim Cole is forced to resign, many investors are hoping that the company can put its lackluster history behind it and move forward. The involvement of an activist hedge fund like Chapman Capital also helps the situation by serving as a catalyst for fast change. Once the company is able to rid itself of Mr. Cole and release updated financial statements, it may be able to refile for listing on the Nasdaq. From there, it can begin to rebuild what it once had. It is also worth noting that Chapman Capital had pushed the company towards a sale awhile ago - a strategy that it could resume after these problems have been resolved given the deep value at which the stock is trading. Regardless, this is definitely a stock worth watching over the next couple of months!

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Sprint Nextel (NYSE:S) is exploring plans to finance its venture into wireless broadband. The $3 billion WiMax iniative would be a direct competitor to 3G services and has caused concerns among some investors, including Relational Investor's Ralph Whitworth. The activist investor questioned whether or not management's WiMax strategy was worth the extensive upfront costs.

Management's response to these concerns during a recent Bear Stearns conference came in the form of a proposed spin-off of the WiMax unit. Sprint executive suggested that they could spin-off the unit as part of a deal with Mr. McCaw's Clearwire Corporation - a company that is quickly growing in the same niche but not yet profitable. Many investors would favor this deal because it would both remove a potential WiMax competitor and rid Sprint of a potentially risky business.

Other plans to finance the WiMax unit include the involvement of outside financiers to fund the project, including cable companies. After all, Sprint is already involved in a wireless joint venture called Pivot with three other major cable operators. Moreover, Time Warner has reportedly already been in talks with the company regarding the future of WiMax. Other plans include a more standard deal with Clearwire where Sprint may lease technology in an effort to quickly expand its nationwide footprint at relatively low cost.

So, what does this all mean for investors? Well, Sprint executives are finding themselves in a difficult position. They are forced to increase capital spending significantly if they wish to keep WiMax in house, yet they are reluctant to competely separate the company because it could give Sprint an edge over competitors in the future. And with the company already facing criticism over its sluggish cell phone business, this edge could be just what it needs. Unfortunately, the closest comparison we have to estimate the unit's success is Clearwire, whose stock has dropped over 20% since its IPO. Whether or not the strategy pays off remains to be seen, but this is definitely a story to follow in the meantime!

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The Blackstone Group's initial public offering may face a significant devaluation after lawmakers introduced a bill this week that could drastically curb private equity income. Senators Max Baucus and Charles Grassley proposed a bill late Thursday that would tax as corporations all partnerships that derive the majority of their income from managing the assets of others. If the bill succeeds, it would bring their effective tax rate to approximately 45 percent. This could decrease the IPO's $40 billion valuation by as much as 15 to 20 percent.

Private equity groups experience great tax benefits that many see as unfair. Not only are they taxed as partnerships (lower on the tax bracket than corporations), but managers are also able to pay themself something known as "carried interest", which is taxed at the capital gains tax rate instead of the ordinary tax bracket. These factors lead to drastically lower taxes than one might expect from groups pulling in so much money, which caught the attention of many lawmakers.

Shortly after, all eyes were on Fortress Investment Group when they became the first private equity firm to go public. Now it appeared as if these partnerships could not only get away with paying lower taxes but also get away with using a partnership structure as a public company! This enabled private equity firms to offer liquidity and higher valuations to their managers and partners without paying any additional taxes. Apparently this was the final straw for lawmakers - the new bill clearly adds a price tag to being a public company.

Interestingly, Blackstone and Fortress will be grandfathered in by not being forced to pay the additional taxes for another five years. However, an imminent significant tax increase in five years still puts a question mark on just how much valuations will be affected. Regardless, it will be interesting to see how Blackstone reacts and whether the apparent trend towards going public will continue for private equity.

Adaptec Inc. (NDAQ:ADPT) is a struggling technology company that designs, manufactures and markets storage products and software. The company recently reported weak financials, including a 28% decline in year-over-year revenues and a bleak outlook for 2008. So, why is this company one worth a second look for investors?

The first thing worth noting about Adaptec is their cash stockpile. The company currently has approximately $572 million in cash, which amounts to $4.81 per share. Compare that to a stock price of $3.71 and it is easy to see why the cash is appealing! The problem is that the company has embarked on an acquisition-driven strategy that could burn through this cashpile. Luckily, there is an activist hedge fund that is hoping to prevent this from happening and unlock value for shareholders!

Late last month, Steel Partners disclosed a 12.7% stake in the company and demanded representation on the Board of Directors. The activist hedge fund conveyed its disappointment in the company's recent performance and insisted that the company's acquisition-driven strategy was illconceived. Steel Partners also threatened to nominate an entire slate of new directors at the 2007 annual meeting if they are not granted representation. Given Steel Partners' successful track record with activist investing, this is definitely good news for shareholders!

The final thing that Adaptec has going for it are it's restructuring efforts and net operating loss carryforwards. The company has been embarking on efforts to reduce its costs for the past several years. Recently, these efforts have resulted in the company's first net savings of $9 million beginning in the second quarter of 2007. These reductions in spending help preserve the cash stockpile that represent the real value in this investment. Also, thanks to the company's previous spending, they have built up significant net operating losses that can be carried forward to offset future tax on gains!

Overall, these factors make ADPT a stock worth watching closely over the next few months as Steel Partners works to unlock value!

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Sunrise Senior Living (NYSE:SRZ) management faced some harsh criticism from Millenium Partners today after the hedge fund disclosed a 2.5% stake in the company and a critical letter to the Board of Directors. The activist hedge fund demanded that the company either eliminate the current management team or immediately put the company up for sale.

Millenium Partners began their letter by stating that the current management does not belong as a participant in the public securities market. Accordingly, they petitioned the Board of Directors to take one of three actions: (1) sell or merge the company either in a public transaction or a going private transaction; (2) restructure the company in a transformative way so that its different elements - primarily real estate development and ownership on one hand and healthcare facility operation on the other - can be more readily appreciated and valued by the market or; (3) recruit new management that is more professionally compotent at successfully managing a public company.

The biggest problem facing these shareholders are the various defensive measures that the company has in place. These poison pills may have been useful in the past when the company was small, it now just impedes investors from forcing value-creating options for shareholders. But if Millenium Partners is successful, it could mean significant share appreciation for shareholders. So far the company has yet to respond, but this company is definitely one worth watching in the meantime.

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