Countrywide, Thornburg, Luminent shares climb; Flow International shares jump on $109 million merger

By Sheri Kasprzak

New York, Dec. 5 - Shares of the country's major mortgage lenders got a boost Wednesday after the federal government negotiated an agreement with the sector to freeze interest rates on some subprime mortgages for five years.

A sellside trader Wednesday said Countrywide Financial Corp. benefits the most from the news because it holds the most subprime mortgages. Countrywide's stock has suffered substantially in the past year because of its exposure to subprime mortgages.

"It's the largest, so obviously it has the most trouble from [the subprime crisis]," he said. "I haven't seen the plan yet, so I can't really say if it's a good solution. I think it will probably be a good thing, something to stop some foreclosures. Beyond that, I really can't say."

Another sellside trader also said the idea seems like a good plan but it's just too soon to tell.

"Way too early to tell," he said. "Sounds good, seems ideal, but we'll see."

Shares of Countrywide rose by 42 cents, or 4.2%, on Wednesday to end the day at $10.42 (NYSE: CFC). The stock traded between $10.06 and $10.78 Wednesday.

Looking generally at Countrywide, a sellside trader said Wednesday that he feels Countrywide will eventually come back and will be strong.

"They've taken a lot this past year and it's going to take a long time and a fair amount of effort to get back on track, but I don't see why they can't," he said.

Moving to the other mortgage lenders, Thornburg Mortgage Inc.'s stock climbed 21 cents, or 2.07%, to close at $10.37 (NYSE: TMA). Shares of Luminent Mortgage Capital Inc. edged up 4 cents, or 3.77%, to end at $1.10 (NYSE: LUM). Luminent's stock gained another 2 cents after the market closed.

In other news Wednesday, Flow International Corp.'s stock skyrocketed after the company agreed to buy Omax Corp. in a $109 million cash and stock transaction.

Flow to merge with Omax

Flow International's stock took off on Wednesday, gaining 25.27%, or $1.86, to settle at $9.22, but lost 46 cents in after-hours trading (Nasdaq: FLOW) after the company said it will buy Omax Corp. in a $109 million cash and stock deal.

Omax is a private provider of computer-controlled, abrasive waterjet systems. Flow develops industrial waterjet machines used for cutting and cleaning.

In the transaction, Flow will pay $109 million in cash and stock with the potential for a contingent earn-out in two years of up to $26 million in either stock or cash.

"We believe a combination of the two companies presents a unique opportunity to enhance the global growth of waterjet solutions, which represent a relatively small but rapidly growing part of the overall market for cutting solutions," said Charley Brown, Flow's chief executive officer, in a news release.

"While there are many synergies that make this merger a natural fit between waterjet pioneers, each company brings a unique set of intellectual property, engineering strength and market focus, including Omax's unique distribution channels worldwide, that makes this accretive combination so financially compelling and operationally attractive."

"Our two companies share similar histories, passion, vision and are quite literally neighbors in Kent, [Wash.]," said John Cheung, chairman of Omax, in a statement.

"Together, I believe we will be better able to foster the innovation necessary to continue introducing the superiority of the waterjet to a large and growing marketplace."

The transaction is set to wrap up in six months.

Nokia buys Avvenu

In other news, Nokia settled its acquisition of Avvenu, a remote access and private sharing technology that allows users to access and view personal computer files remotely.

"By acquiring Avvenu, Nokia plans to further enhance its portfolio of solutions for mobile operators, as well as deliver a secure file access and share service direct to mobile workers," said a statement released Wednesday by Nokia.

Shares of Finnish communications giant Nokia were off by a penny on Wednesday to end the day at $38.91 but regained the penny in after-hours trading (NYSE: NOK).

Wal-Mart wraps tender for Seiyu shares

Elsewhere, Wal-Mart Stores, Inc. completed its tender offer for all of the outstanding shares of its Japanese subsidiary, the Seiyu, Ltd.

A total of 411,884,160 shares were tendered in the deal, raising Wal-Mart's ownership of the company to 95.1% from 50.9%.

"We are very pleased with the positive response to this tender offer," said Mike Duke, vice chairman of Wal-Mart, in a news release.

"This successful result paves the way to achieve our stated goal of full ownership of Seiyu, which will enable Seiyu and Wal-Mart together to accelerate the delivery of long-term benefits to our customers, the communities we serve, our associates and our business partners."

The tender offer began in October, and settlement for tenders received will begin Dec. 11.

Seiyu is a Japanese retailer with major operations in supermarkets and general merchandising stores. Shares of the company remained unmoved to close at $1.27 (Pink Sheets: SYLTF).

Shares of Wal-Mart were up 71 cents, or 1.47%, to end at $48.90 (NYSE: WMT). The stock slipped by 4 cents after hours.

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