NEW YORK ( TheStreet) -- Deal activity continues to drive small-cap stocks, with RehabCare ( RHB) shooting up after Kindred Healthcare ( KND) said it will acquire the company for $900 million in cash and stock. The deal will create the largest rehabilitation services provider.

Under the deal, shareholders of RehabCare will receive $26 in cash and 0.471 shares of Kindred. The stock was soaring 44% to $36, well above the offer price, indicating traders' expectations for a higher bid. Shares of Kindred also surged 24.5% to $24.29.

Battery-maker Exide Technologies ( XIDE) saw its shares jump 14% to $11.89 after it delivered better-than-expected results on stronger sales in Europe. The company reported adjusted profits of 33 cents per share beating estimates of 27 cents.

Shares of Boyd Gaming ( BYD) were gaining 11% to $12.29 after analysts at Bank of America/Merill Lynch upgraded the stock to a buy from a neutral along with MGM resorts ( MGM) on expectations of a continuing recovery in Las Vegas.

Communications software maker Synchronoss Technologies ( SNCR) reported strong fourth quarter profits after the bell Monday and forecast better-than-expected results for the first quarter. The firm expects Verizon's ( VZ) contribution to its 2011 revenue to double to 10 percent, compared with 2010. Shares were climbing 11% to $34.64.

Capstone Turbine ( CPST) shares were rising 7% to $1.48 on an upgrade from Ardour Capital to buy from accumulate.

Shares of LED equipment company Veeco ( VECO) were stronger by 5.5% at $47.64 despite a weaker-than-expected guidance for the first quarter. But the company's full-year guidance was ahead of estimates.

KB Home ( KBH), PMI Group ( PMI), Talbots ( TLB) were other notable gainers.

--Written by Shanthi Bharatwaj in New York

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