Accredited Pops on Takeout

Accredited Home Lenders(LEND Quote) soared 11% after private equity firm Lone Star agreed to take out the mortgage player in a $400 million deal.

Shareholders of San Diego-based Accredited will get $15.10 a share, a 10% premium to Friday's closing price. Shares were up $1.68 to $15.44 early Monday.

"After careful analysis, we believe this agreement is the best alternative available to protect shareholder value and provide the capital we need to support the company's business over the long term," said Accredited CEO James Konrath. "In Lone Star, we have found a partner who has a record of helping companies like ours successfully address financial and operational challenges."

The news comes as private equity cash floods into the mortgage market, which has been hit hard by souring loans to homebuyers with poor credit histories. One of the biggest so-called subprime lenders, New Century(NEWCQ Quote), filed for Chapter 11 protection April 2 after its loan book went bad and investors demanded the company buy back some loans it had sold them.

Shares of several other lenders rose Monday after Accredited announced the sale.

Shares of Fremont General(FMT Quote) rose 20 cents or 1.6% to $13.09.

Two weeks ago Fremont General agreed to sell its commercial lending business to iStar Financial(SFI Quote) for $1.9 billion.

Shares of NovaStar Financial (NFI Quote) surged 44 cents or 5.9% to $7.90.

The Kansas City, Mo.-based lender said in April that it had hired Deutsche Bank to explore strategic alternatives.