Countrywide up as Cramer says Merrill could buy it

NEW YORK (Reuters) - Countrywide Financial Corp. CFC.N shares rose 1.6 percent in six minutes on Thursday afternoon after CNBC stock commentator Jim Cramer said Merrill Lynch & Co. MER.N could buy the largest U.S. mortgage lender.

Cramer, whose recommendations often move stocks, said Calabasas, California-based Countrywide will survive the current housing downturn and be a "logical takeout" for Merrill.

Earlier Thursday, Merrill posted a $2.16 billion quarterly profit, and said loan volumes rose and defaults among new borrowers fell at First Franklin Financial Corp., a subprime mortgage lender it acquired from National City Corp. NCC.N for $1.3 billion in December.

"They sang the praises of buying Franklin," Cramer said, referring to Merrill. "How could they not be interested (in Countrywide)? Countrywide's going to be king. I just don't think it can be independent ... It's time to buy the last man standing."

Countrywide shares rose to $38.59 from $37.98 in the first six minutes after Cramer made his recommendation. He said they could trade in the $45 to $48 range. Later, the stock eased back to $38.25, up 13 cents on the day.

Countrywide did not immediately return a call seeking comment.

Jeff Edwards, Merrill Lynch's chief financial officer, on a conference call said: "We continue to look for opportunities to grow (our mortgage) business ... In the U.S., I would say our focus right now is on executing the First Franklin acquisition."

Countrywide is periodically the subject of buyout rumors. A published report in January said Bank of America Corp. (BAC.N) might buy or enter a joint venture with it. Angelo Mozilo, Countrywide's chief executive, last year extended his employment contract until 2009, when he will turn 71.