Paperstand (MHS for PLMD; WEN on the block)

According to the WSJ, Medco Health Solutions (MHS) plans to buy PolyMedica (PLMD) in a $1.29bn deal. The deal would allow Medco to capture a much bigger piece of a mkt driven by America's diabetes and obesity epidemic. With one million patients as members, PolyMedica is the country's biggest supplier of blood-glucose testing supplies. Under the terms of the all-cash deal, Medco said it would pay $53 a share for PolyMedica, a 17% premium. Including the assumption of $213m in PolyMedica debt, the deal is valued at about $1.5bn.

The WSJ reports that Triarc Cos. said it had reached a confidentiality agreement with Wendy's Intl. (WEN) to review financial data in order to prepare a possible bid. Chmn Nelson Peltz has indicated that Triarc is willing to offer as much as $41 a share.

After months of wrangling, it looks as if financier Carl Icahn and his allies have finally gained sway over WCI Communities (WCI). Shareholders are expected to vote tomorrow to install Mr. Icahn and two of his representatives on the WCI board, as part of an agreement last week between the activist investor and the co's current board. Two investment-firms that own sizable stakes of the co also are each expected to gain a seat, while 3 current board members will keep their seats. It will be a victory, of sorts, for Mr. Icahn, whose $920m bid for WCI was rejected by the board in April, stunning many on Wall St. who believed the offer was as good as it would get. No better bid emerged. "To the extent that one of his objectives was to gain control, he's gained that," says Paul Puryear, of RayJay. "Maybe it is a win for Carl Icahn. I don't know if it's a win for shareholders."

“Heard on the Street” column discusses Countrywide (CFC), whose stock price is down nearly 12% since the purchase of convertible preferred shares was announced by BofA. That's largely b/c investors still don't know how badly Countrywide has been wounded by the recent credit crunch. At a minimum, Countrywide faces a hit to near-term earnings; some analysts expect a loss in the current qrtr. At worst, the co could be forced to dump assets at fire-sale prices or seek another emergency infusion of capital, potentially slashing the value of its stock further. "2bn dollars from BofA is not a lot compared to what they may need," says Stuart Plesser, of Standard & Poor's. Though Countrywide bills the investment a "vote of confidence," Mr. Plesser thinks the sale of preferred stock signaled distress. The preferred stock carries a yield of 7.25% and is convertible into a stake of about 16% of Countrywide's common shares, at $18 apiece. The stock had been $36 only 5 weeks earlier, and Mr. Plesser doesn't think Countrywide would have sold such a large stake at such a low price unless it needed cash immediately.

Barron’s Online highlights Trinity Industris (TRN), saying that after a 30% pullback from last May's peak, the co’s shares should get back on track. Trinity's attractive valuation and solid prospects have encouraged its largest shareholder, Tontine Capital Partners, led by respected hedge-fund manager Jeffrey Gendell, to plunk down nearly $80m this year as the stock fell from around $43 to $35. That dip reflected concern that the railcar industry has peaked, owing in part to a buildup for ethanol-related cars. But strong backlogs in railcar orders, plus a robust demand for Trinity's inland barges and wind tower structures, make for solid earnings prospects. Meantime, the shares trade at an undemanding 10x forward earnings. Sam Halpert, of Van Eck Associates, sees Trinity as a cheap play in infrastructure, where other stocks have gotten rather rich. While he says he is watching railcar demand closely, he notes Trinity's "valuation is attractive" given that three of its main businesses "have good growth prospects as a low-cost provider." At minimum, he sees a 20% upside to Trinity shares, noting that that figure is probably "overly conservative." On avg, analysts polled by Thomson Financial see 38% upside to the stock.

“Inside Scoop” section reports that with the co’s shares relatively flat YTD, two directors at Pep Boys (PBY) signaled their confidence in the co's growth potential with about $1.5m in recent purchases. James Mitarotonda purchased over $1.2m in stock through his equity fund Barington Companies Equity Partners. William Leonard purchased 20K shares. Mitarotonda now owns more than 4.5m shares in Pep Boys, or 8.8% of the co's outstanding. Leonard's total of 126,699 shares is less than 1% of the co's shares.