A few months ago, Fortress Investment Group (NYSE: FIG) was the first alternative investment fund to go public in the US (the firm has $35.1 billion in assets under management). Well, it's starting to flex its muscles.

Today, the firm said it will shell out $62.50 per share or $2.2 billion for Florida East Coast Industries (NYSE: FLA). Keep in mind that there is a special $21.50 special dividend due – so the ultimate price tag is $84 per share. If you throw in the debt, the transaction comes to $3.5 billion.

FLA has two major divisions. There's Flagler Development that focuses on commercial real estate and has 8.6 million square feet of Class-A office and industrial space. Next, there is the Florida East Coast Railway, which is a regional player in hauling freight (that covers about 351 miles or so).

In 2006, revenues increased from $362.3 million to $458.2 million.

I think it's a good bet that Fortress will split up the company so as to realize more value. For example, Fortress recently purchased RailAmerica.

On the news of the FLA deal, the stock traded up 11.97% to $83 per share.

Tom Taulli is the author of various books, including the Complete M&A Handbook and the EDGAR-Online Guide to Decoding Financial Statements.

MOST NOTEWORTHY: Chico's FAS (CHS), Cache, Inc (CACH), JPMorgan Chase & Co (JPM) and National City Corp (NCC) were today's noteworthy initiations:

• Thomas Weisel started Chico's FAS (NYSE: CHS) with a Market Weight rating and $26 target citing near-term mix pressure, lower margin potential and lower square footage growth.

• Thomas Weisel also initiated shares of Cache, Inc (NASDAQ: CACH) with an Overweight rating and $21 target, citing a significant sales opportunity driven by new categories and demographics.

• AG Edwards believes the risk/reward for JP Morgan & Chase Co (NYSE: JPM) is balanced, assuming coverage with a Hold rating.

• Lehman resumed coverage of National City Corp (NYSE: NCC) with an Overweight rating and $41 target...

OTHER INITIATIONS:

• Montgomery & Co initiated SiRF Technology Holdings Inc (NASDAQ: SIRF) with a Buy rating and $32 target.

• Merriman initiated shares of Aware, Inc (NASDAQ: AWRE) with a Buy rating.

• Xinhua Finance Media Ltd (NASDAQ: XFML) was started with a Buy rating at W.R. Hambrecht.

• Matrix USA initiated shares of Florida East Coast Industries Inc (NYSE: FLA) with a Strong Sell rating.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).