UPDATE: Wunderlich Securities Downgrades Elster Group to Hold on Likely Purchase by Melrose

Wunderlich Securities lowers its rating on Elster Group

from Buy to Hold, but reiterates its price target at $18. Wunderlich Securities comments, "Britain-based Melrose PLC is in talks to acquire Elster Group (ELT) for $20.50/share. We believe the transaction is likely to occur. The largest shareholder owns 60% of ELT and has been looking liquidate its holdings. Because the shares have reached our target, we are lowering our rating to Hold from Buy. …Our price target technique is to assume we own the company and all the income flows to us. We forecast that out 67 years and discount it back to today. At the offering price of $20.50, we believe that is a fair value relative to our own valuation technique." ELT closed at $18.85 on Friday.