Shares of Mirant Corporation ( MIR) rallied Tuesday after the company announced a share buyback program of up to $1.25 billion and the auction of international assets. The board of directors agreed to repurchase shares through a Dutch Auction tender offer of up to 43 million shares at a price between $25.75 and $29 per share. Mirant shares were recently up 41 cents, or 1.5% to $27.21. The auction will begin Wednesday and will be funded in cash via a combination of cash on hand and cash obtained through completion of a term loan. "Our strategic plan reflects our continued commitment to enhance shareholder value, both through the return of cash to our shareholders and through our continuing U.S. business," Mirant Chairman and CEO Edward Muller said in a press release. These developments are the result of efforts by well-known activist hedge fund Pirate Capital, whose founder Thomas Hudson pushed for changes last month, as reported here . Pirate owns 1.6% of Mirant shares and called for a $4.7 billion buyback, in a letter sent to the company and included in a 13D filing on June 20. The amount authorized by the company Tuesday is substantially less than Pirate's recommendation, but nothing indicates that it is final. In addition, Pirate called for the sale of the Philippines and Caribbean assets, which the company agreed to do Tuesday. Mirant retained Credit Suisse First Boston as its advisor for the sale of the Philippines business while it hired J.P. Morgan for the sale of the Caribbean business. The company declined to comment, through a spokesman. Hudson did not return a call. In a financial plan attached to the letter sent to the company last month, Pirate set three goals for the board of directors: closing the valuation gap, divesting assets and buying back stock. The company has at least begun to implement two of those goals: the share buyback and the sale of assets. Concerning the valuation gap, Pirate estimates that the company's value is approximately $32 a share, assuming a peer valuation of 7.7 times 2007 EBITDA. Since the activist letter on June 20, shares have gained 7%.