Tumbleweed shares soar on $2.70-per-share buyout

Shares of Tumbleweed Communications Corp. soared Friday after French information technology company Sopra Group said it would buy the maker of secure messaging software at a 53 percent premium to its Thursday closing stock price.

Sopra said it would pay about $138 million, or $2.70 per share, for Tumbleweed. Tumbleweed shares closed at $1.77 Thursday.

The stock spiked 81 cents, or 46 percent, to $2.58, approaching their 52-week high of $2.73 set last June.

Roth Capital Partners analyst Joshua Jabs applauded the deal. "We believe (Tumbleweed) investors should be satisfied with the price obtained from Sopra," he wrote in a note to clients.

"While Tumbleweed continues to offer attractive messaging and file transfer solutions, we believe its environment had become hyper competitive with larger players entering the space and merging the company with a larger platform was the best possible outcome for investors," he added.

Jabs maintained a "Hold" rating on Redwood City, Calif.-based Tumbleweed but raised his price target to $2.70 from $1.90.

AvondalePartners analyst P. Sean Jackson viewed the deal positively, too. "While we like Tumbleweed's products we believe it is best served as a member of a larger organization," he wrote to clients.

"We would not be surprised if this deal served as a catalyst for other mergers in the small cap security space," he added. He identified Entrust Inc. as a possible buyout candidate.

Entrust shares fell 6 cents, or 2 percent, to $2.95.