NEW YORK ( TheStreet) -- Shares of both OfficeMax ( OMX) and Office Depot ( ODP) pulled back in late trades after rallying on merger speculation during Monday's regular session.

Oppenheimer & Co. reportedly stirred the pot this morning, issuing a research note that again raised the possibility of a combination. This time, the analyst authoring the note said Office Depot Chief Executive Officer Neil Austrian had expressed openness to a potential deal during a recent meeting.

Shares of Boca Raton, Fla.-based Office Depot jumped 6.5% to $4.07 on volume of 12.7 million in the regular session, while OfficeMax, headquartered in Naperville, Ill., saw its stock rise 7.5% to finish at $7.64 on volume of 5.1 million.



In extended trading, Office Depot shares were last quoted at $3.89, down 4.4%, on volume of around 120,000, while OfficeMax's stock was off 4.7% to $7.28 on volume of 24,000, according to Nasdaq.com.

The stocks of both office supply retailers have been weak all year with Office Depot losing 30%, and OfficeMax down nearly 60% so far in 2011. With revenue of $11.6 billion in 2010, Office Depot is the larger of the two companies, operating roughly 1,500 stories with the majority -- around 1,100 located in the United States and Canada. OfficeMax's revenue totaled $7.2 billion in 2010, and the company has roughly 1,000 U.S. locations.

Topline growth has stalled for both companies, prompting the talk of consolidation. Wall Street sees flat revenue for both names in 2011, and analysts are in wait-and-see mode with a good portion -- 14 out of 18 for Office Depot and 8 of 17 for OfficeMax -- rating the stocks at hold or lower.

Neither company issued a statement on speculation Monday, despite the higher than average volume in their respective stocks.

Prospect Capital

Shares of Prospect Capital ( PSEC) slumped in late trades after the New York-based investment company announced plans for a dilutive stock offering.

The company, which invests in private and publicly traded microcap businesses, said it's commenced an offering of 10 million shares of its common stock. The deal also includes an over-allotment option for the potential sale of an additional 1.5 million shares.

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