Microsoft mixed after Parlano purchase; Thornburg up on $500 million preferreds; Friendly's LBO closes

By Sheri Kasprzak

New York, Aug. 30 - Microsoft Corp. sent a message to Chicago-based Parlano; the software giant wants to acquire the company, which makes MindAlign, an application for enterprise group chat.

The news sent shares of Microsoft up on Thursday.

Elsewhere, shares of Thornburg Mortgage Inc. were higher after the mortgage lender said it pocketed $500 million from the sale of some convertible preferred shares.

The capital raise was just what the doctor ordered, according to sell-side traders.

Finally, the shareholders of Friendly's Ice Cream Corp. agreed to its acquisition by Sun Capital Partners, Inc. and the leveraged buyout then closed.

Microsoft to buy Parlano

Microsoft said it will acquire Parlano, a private company that makes enterprise group chat software called MindAlign.

The Redmond, Wash.-based software icon said it wants to add the technology as a feature of its Microsoft Office Communications Server and Microsoft Office Communicator, the company's server and client software for presence, instant messaging, conferencing and voice over internet protocol.

By 10:20 a.m. ET, Microsoft's stock was up 11 cents, or 0.38%. At the end of the day, however, the stock had given up 14 cents to close at $28.45, and lost another 4 cents after hours (Nasdaq: MSFT).

"Parlano has been successful in meeting the rigorous communications needs of companies in financial services and other vertical markets," said Gurdeep Singh Pall, corporate vice president of Microsoft's Unified Communications Group.

"Parlano's expertise and technology, added to Microsoft's unified communications offering, will deliver customers the most complete presence, instant messaging and group chat solutions on the market."

Parlano's software is used by companies in sectors like financial services, call centers and technology, according to a Microsoft-released statement from Thursday.

The terms of the acquisition were not announced but the transaction is set to close in the fourth quarter.

Once the merger closes, members of Parlano's corporate team will join the Unified Communications Group at the Redmond, Wash. Headquarters.

Move not a strange thing

One sell-side trader said Thursday that he didn't feel the move is that big of a deal.

"It's pretty much par for the course for Microsoft," he said. "When they see technology they want, they buy. It makes sense for them. I'm not saying it's not a good move for them but it's hardly a surprising move."

Thornburg raises $500 million

Thornburg Mortgage helped turn itself around on Thursday by adding $500 million to its books from the sale of 10% cumulative convertible preferreds.

The company sold 20 million shares at $25.00 apiece. The preferreds are convertible at $11.50 each, a 3% premium to the company's $11.16 closing stock price from Wednesday.

Friedman, Billings, Ramsey, the underwriter, has a greenshoe for up to 3 million additional shares.

"It's a great move for them," said a sell-side trader on Thursday morning.

"It is so hard for mortgage lenders to raise money right now and I think it gives investors an amazing amount of confidence that they were able to do so, and at a premium. It really does go a long way to helping them turn their situation around."

Another sell-side trader said the move was positive but seemed less enthusiastic about the improvement in the stock.

"They're a company in need of money," he said. "They've raised money, done it at a pretty good price so of course their stock is going to climb."

One analyst noted that the move was made out of distress.

"This is clearly a distress issuance," said the analyst. "They needed money and they needed it now."

The New York Stock Exchange halted trading of Thornburg early in the session, pending news. Before the halt, the stock had gained around 8%.

When trading resumed, the stock jumped by 15%.

At the end of the session, the stock was up 65 cents, or 5.82%, to close at $11.81, gaining 2 cents after hours (NYSE: TMA).

The move at Thornburg comes just a week after competitor Countrywide Financial Corp. completed a similar offering, selling $2 billion in shares to Bank of America. Shares of Countrywide were down on Thursday. The stock ended the day off 17 cents to close at $19.64 (NYSE: CFC). After-hours, however, the stock gained 2 cents.

Friendly's shareholders approve merger

In other news, Friendly's Ice Cream said its shareholders have given the go-ahead to its acquisition by Sun Capital Partners and the transaction closed later in the day.

The news sent the stock up slightly. Friendly's shares ended the day up 3 cents to close at $15.50 (Amex: FRN).

Sun Capital agreed to buy Friendly's stock at $15.50 each, a slight premium to the company's $15.47 closing stock price from Wednesday.

Connected to the offering, Sun Capital and Friendly's completed its cash tender offer of Friendly's $175 million in 8.375% senior notes due 2012. As of midnight on Wednesday, $167.196 million of the notes had been tendered.

"With a 72-year operating history, Friendly's enjoys strong brand equity within its existing markets and, with its excellent ice cream menu, a unique position in the family dining sector," said Gary Talarico, managing director of Sun Capital, in a statement released Thursday.

"We look forward to working with the management team to strengthen the company's performance through operating efficiencies, enhanced customer service, improved menu offerings and store remodeling and openings within and potentially beyond its historical markets."

"We are very pleased to have an opportunity to partner with a financial sponsor with extensive operating experience in the restaurant industry and look forward to the challenge of strengthening our product offering bringing higher levels of service and quality food to our customers," said George Condos, Friendly's chief executive officer, in the statement.

Alltel's stock slips

A day after announcing that its shareholders approved its acquisition by TPG capital and GS Capital Partners, shares of Alltel Corp. fell slightly on Thursday.

The dip comes as the broader stock market was mostly down.

Alltel's stock ended down 5 cents to finish the day at $67.85 (NYSE: AT). On Wednesday, the stock gained 60 cents to close at $67.90.

Under the merger terms, TPG and GS will pay $71.50 per share for Alltel's stock. The share price is a 6.2% premium to the company's $67.30 closing stock price on Tuesday. The transaction is set to close by the end of this year.

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