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)

Document Security Systems (AMEX:DMC) recently announced a new credit arrangement that has many investors and activist groups questioning the motives of the company’s management and board. A recent proxy statement by the company revealed a $3 million loan inked with Fagenson & Co’s Robert Fagenson, who owns 7.4% of the company and also happens to be on the board of directors.

Despite DMC’s $88 million market cap with no outstanding debt, the company decided to forego traditional financing and instead take a loan from its largest shareholder. Interestingly, the loan was collateralized with DMC’s largest subsidiary, Plastic Printing Professionals Inc., which is also the company’s only profitable division producing a product. Asensio and other large activist groups and shareholders have since questioned the motives behind such arrangements.

The arrangement will allow Fagenson to either profit from DMC’s rise or become the new owner of Plastic Printing Professionals if the loan doesn’t get paid back – either way, he’s a winner. However, the outlook is not so great for DMC’s other shareholders who stand to lose the most profitable division of their company with financing that was unnecessarily collateralized when alternative financing was available… they will be forced into court in order to recover any money they lose.

So, is Robert Fagenson setting himself up to obtain the company’s most valuable asset by using it as collateral for a small $3 million loan that could have easily been obtained elsewhere? Well, even the possibility of such a disastrous move should be enough to frighten some shareholders. DMC is also involved in some questionable dealings – the firm is currently engaged in a stock-financed legal battle against the European Central Bank over its patented anti-counterfeiting technology. The move comes after the company tried to sue the U.S. Treasury Department for infringements when the new $100 bill was release (which was rejected).

In the end, investors may want to stay away from this company while its most valuable asset is put at risk for a small $3 million loan. A loss of this division would be devastating while shareholders continue to face significant dilution as a result of frivolous lawsuits against central banks. While a court victory would almost certainly provide a massive boost to the share price, it is a probability that seems minute at this point.

Related Companies
Xerox Corporation (XRX)
Digimarc Corporation (DMRC)
WPT Enterprises Inc. (WPTE)

Bank of America (NYSE:BOC) agreed to purchase the troubled Countrywide Financial (NYSE:CFC) in a $4 billion all-stock deal today after speculation of a bailout drove shares up over 50% late in yesterday’s session. The deal would give Countrywide shareholders 0.1822 shares of Bank of America for each share they own – or about $7.16 per share. The number came in about 7.6% lower than shareholders predicted yesterday with the stock’s jump after-hours, but is non-the-less a welcome offer for the company.

“We are aware of the issues within the housing and mortgage industries,” said CEO Ken Lewis to the WSJ. “Mortgages will continue to be an important relationship product, and we now will have an opportunity to better serve our customers and to enhance future profitability.”

Many are hoping that this move could help prevent a recession that so many have been predicting. A weak economy combined with rising mortgage and credit card delinquencies have become a substantial threat to the economy. Retailers reported weak sales in December and American Express reported reduced spending and increased delinquencies among its more affluent user base. Meanwhile, unemployment jumped and many economists pegged the odds of a recession close to 43%.

Ben Bernake indicated a willingness yesterday to cut rates more deeply, which helped boost the markets. Meanwhile, the bush administration starting throwing around the idea of a direct economic stimulus, such as tax rebates. Now, Bank of America’s move signals that some of the troubles in the mortgage market may finally be coming to the end of the climb in delinquencies and closer to regularity.

In the end, this is great news for shareholders and the economy in general. Countrywide shareholders no longer have to worry about bankruptcy and further declines while economists are now confident that at least one major company believes that the crisis is finally coming down from a high.

Related Companies
Wachovia Corporation (WB)
Regions Financial Corp. (RF)
Bank of Montreal (BMO)