Paperstand (RHD, IAR, MSM)

According to the WSJ, News Corp (NWS) reached a tentative agreement for the purchase of Dow Jones (DJ) at its original $5bn offer price. The deal will be put to the full Dow Jones board this evening for its approval. The deal still faces its biggest hurdle - getting approval from the Bancroft family. Michael B. Elefante, the Bancroft family's lead trustee, has scheduled a meeting for Thu at which he would present the agreement to all Bancroft family members before asking for their final vote. Mr. Elefante is expected to give the family several days to make a decision, suggesting a final resolution could be achieved some time next week.

“Heard on the Street” column discusses yellow-page publishers, RH Donnelley (RHD) and Idearc (IAR), whose shares have been soaring. But as individuals and businesses move to more Internet searches, rather than relying on old-fashioned telephone books, it isn't clear if the recent rally can be sustained. The stocks are popular with analysts and some hedge-fund investors b/c they appear inexpensive based on their generation of free-cash flow. In the past year, the share price of Donnelley is up more than 40%. Idearc is up more than 30%. The co’s are heading online to retain advertisers and consumers, but the co’s still make almost all their money from books. Donnelley receives less than 2% of its rev from the Internet, while Idearc receives about 9%. "Yahoo and Google are both forging alliances with newspapers to offer local search engines," says Richard Tullo, of Sidoti. "While I think these new alliances will be very good for media conglomerates, it means added competition for the directory operators."

Barron’s Online “Inside Scoop” section reports that with shares of MSC Industrial (MSM) trading near record-high territory, execs and directors of the co are exercising options and shedding stock. Last week, MSC Chmn Mitchell Jacobson sold $9m in class A shares. Several other MSC insiders also sold stock last week, in the wake of MSC's F3Q earnings report on June 28. President and CEO David Sandler exercised 57K options and then sold 50K shares for $2.9m. CFO Charles Boehlke exercised $190K in options and then sold the entire batch for $752K. Also last week, two other directors and 5 officers exercised options and then sold stock for a total of $5.4m. In light of the insider sales, Ben Silverman, of InsiderScore.com, says, "I would lean towards taking some money off the table at this point." "They were predictive last time around," Silverman says of insiders. He notes that similar levels of insider sales in May’06 preceded a bearish period for MSC stock. Silverman adds that the "stock is banging up against a perceived fair value."