I'm not good at knowing what to say when somebody has sad news. One of my favorite customers just lost his wife to cancer. He almost cried, I almost cried... Feel so bad for the guy but all you can really say to that is "sorry" and "I'll pray for you."
Discussion
It is always hard
"Aw man..." *awkward silence*
"Dude..." *awkward silence*
"Damn that's..." *awkward silence*
Been on both sides and it's awkward no matter what.
Often a hug is all they need.
"I'm sorry to hear that, if you need anything just let me know."
"I'm so sorry for your loss."
"I don't know what to say, I'm sorry to hear that."
You can say any variation of sympathetic response you want but often they're in such shock they won't remember a lot of what is said. Actions are more important. Go to funeral/wake, shake hands, offer kind words and hugs.
Just do nice things for them and be supportive. It's always hard but genuine love is always the best response.