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Hi John, here's what you need to know for November 13th in 3:10 minutes.

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• Private equity firm KKR has made a $70 billion offer to buy Walgreens Boots Alliance
• Telecoms companies Vodafone and Iliad won investors back over to “defensive” stocks

A Sprinkle In Time

What’s Going On Here?

With $2.5 trillion of “dry powder” sitting in private equity firms’ coffers, it was perhaps only a matter of time before one of the biggest spent $70 billion trying to soothe its sore spots…

What Does This Mean?

Back in 2015, private equity firm KKR spent $640 million on a majority stake in Trainline – before bagging a profit from the British ticketing company’s initial public offering in June, which valued it at $2.5 billion. And on Tuesday, KKR sold off its remaining Trainline shares, freeing up some cash to use elsewhere.

“Elsewhere” might turn out to be Anglo-American pharmacy chain Walgreens Boots Alliance. The public company has reportedly been looking for a private buyer, and it’s attracted a $70 billion offer from KKR. If it goes ahead, it’ll be the biggest private equity deal ever.

Why Should I Care?

For markets: Give with one hand, take with the other.
As the healthcare industry changes – and as Amazon’s burgeoning health business threatens the established players – Walgreens might be better off away from the quarterly scrutiny of public investors. But in the meantime, those investors stand to secure a tidy profit from the KKR agreement. The latter’s offer is about 30% higher than Walgreens’ current price, and it’ll likely hope to sell a healthier and more expensive company back to public investors in the future – just like it did with Trainline.

The bigger picture: Poor rich private equity firms.
One reason private equity firms have so much cash to spare is that they’ve found spending it isn’t as easy as it used to be. In July, for example, two private equity giants made a joint $4 billion offer to purchase German lighting manufacturer Osram. But Osram's instead likely to accept a slightly higher rival offer from a buyer that’s promised to stave off job cuts until 2022 – something private equity firms have a reputation for decidedly not doing.

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Defenders, Assemble

What’s Going On Here?

Shares of “defensive” telecoms companies have been out of favor with investors lately – but on Tuesday, Vodafone and Iliad reminded them that a good defense can be the best offense.

What Does This Mean?

Vodafone, the world’s second-largest telecoms company, announced it’ll make a higher profit this year than it had previously thought. The company has been proactive recently, buying rival Liberty Global’s German and Eastern European cable television businesses – an acquisition that played a big part in its improved forecast. Investors who are becoming more positive about Germany’s prospects might now look twice at the telecoms giant.

Just next door, French carrier Iliad – which once took La République by storm with its low prices – has recently been losing customers to competitors, weighing on its earnings and share price. Iliad also announced a decisive move on Tuesday: it’ll buy 20% of its shares at 26% more than Monday’s share price, and increase its dividend almost threefold.

Why Should I Care?

For markets: Eating their own dog food.
Share buybacks tend to boost a company’s stock price for a couple of reasons. They indicate to investors that the firm’s management is confident in the company’s future prospects and believes its stock is undervalued. That, in turn, might ignite appetite for shares among new investors. And, of course, fresh demand for the stock should push its price higher – especially in Iliad’s case, where a specific, higher-than-current purchase price has been promised, benefiting existing stockholders.

The bigger picture: Defense isn't always protected.
Telecoms companies lock their customers into long-term contracts, which makes their earnings relatively stable and predictable. It’s why they’re seen as “defensive”. And while recent growth has partly been thanks to bundling cell phone, internet, and television plans, costs from the 5G rollout are growing too. Without carefully balancing revenue and costs, telecoms firms risk meeting the fate of defensive consumer staples company Dean Foods, which filed for bankruptcy on Tuesday (tweet this).

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