FairPoint Communications (NYSE:FRP) is one step closer to its purchase of Verizon's (NYSE:VZ) land lines businesses in Vermont, New Hampshire and Maine. The $2.47 billion deal will provide FairPoint with 1.48 million access lines - more than eight times the company's current 248,000 lines. The telecommunications company hopes that this deal will give them a larger footprint in key markets; however, many investors are concerned that the transaction will put the company in a weak financial position.

The majority of the concerns over the deal stemmed from unions representing the bulk of Verizon's workers in the three states who are worried that the $1.7 billion in debt assumed may hinder promised investments and endanger the workers' pensions and benefits. Meanwhile, other shareholders are worried that the large acquisition will necessitate additional infrastructure spending that will significantly impair the company's financial condition.

FairPoint executives addressed these concerns on Thursday by reassuring investors that the existing $1.2 billion revenue stream from Verizon's operations in these states will support operations, capital improvements, dividends and interest on debt. Management also predicts that the transaction will be immediately accreditive to the company's earnings. Many large investment banks have also offered opinions on the transaction that is being spearheaded by Morgan Stanley.

Overall, the transaction should significantly increase FairPoint's footprint in the Eastern United States while increasing the company's revenues. Management's estimates also suggest that the transaction will leave the company in a strong financial position. Plans do not always turn out perfect, however, so investors should pay close attention to the company's costs through the process. In the end, this is a big move by the company that could either reward shareholders with a much larger entity or hurt them with excessive debt.

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Angelica Corporation (NYSE:AGL) shares rose $0.94, or 4.46%, to $22.03 today after Pirate Capital disclosed a 9.8% stake and urged the company to hire an investment banker to explore strategic alternatives. The activist hedge fund insisted that the company's failure to improve operating results has eroded shareholder value and demanded that the company explore how to unlock this value.

Pirate Capital's letter to the Board of Directors indicated a disappointment in management's ability to improve operating results. The company painted a picture of a turnaround by projecting a 7 to 10 percent increase in organic growth in April 2006; however, actual numbers for subsequent quarters turned out to be 0.2%, 0.6% and 0.7%. This prompted the activist hedge fund to recommend that the company hire an investment banker to explore ways in which value could be unlocked through a sale of the company, an asset sale or other extraordinary transactions.

Pirate Capital is well known in the markets as one of the premier activist hedge funds, but experienced some problems late last year when lackluster returns led to a pullout by many of its investments. Regardless, the hedge fund is now back on its feet and working to re-establish its trackrecord by focusing on niche activist opportunities in the marketplace. The strong M&A environment along with optimism amongst shareholders may help them with their push to put AGL up for sale without a fight. However, Pirate Capital said it would nominate its own slate of directors at the company's next annual meeting if necessary.

Overall, Angelica Corporation is an under-performing stock trading at a discount to its peers. Pirate Capital, a well-known activist, is acting as a catalyst to help push the company to explore strategic alternatives. If they eventually comply, shareholders could see significant upside from any sale, asset sale or other extraordinary strategic transactions. This makes AGL a stock worth watching!

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KVH Industries Inc. (NYSE:KVHI) shares moved up $0.24, or 2.82%, to $8.76 today after Roumell Asset Management disclosed an 8.31% stake in the company and urged the company to explore a share buyback. The activist hedge fund insists that the company remains extremely undervalued and that the company (along with other investors) should consider investment.

Roumell Asset Management encouraged the company to weigh any acquisition opportunities against the compelling investment opportunity present in buying their own shares at its current levels. After all, a staggering 40% of the company's market cap is in cash while the enterprise value to sales ratio is less than 1x. Meanwhile, they are generating plenty of cash flow on strong business and defense programs only provide more reason for optimism.

Overall, the company is clearly undervalued and that is ample reason for the company to explore buying its own shares as opposed to an overpriced acquisition. Meanwhile, the company is definitely one to watch for other investors looking for undervalued opportunities. Combined, these factors make KVHI a stock worth watching!

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