Why Shares of Elster Group Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Elster Group (NYS: ELT) jumped 18% today on speculation the company could be bought out.

So what: According to The Sunday Telegraph, British company Melrose is in talks to buy the company for $2.3 billion. According to the report, the company is willing to pay $20.50 per share for Elster and the company is holding out for something closer to $22 per share.

Now what: Shares are still trading more than a dollar lower than the rumored offer price, so there is potential upside if you're willing to place credence in the report. I would take a few chips off the table, but hold on for a higher confirmed offer before cashing out altogether. There is risk that any potential deal could fall through, but I think the upside potential is worth keeping some exposure right now.

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At the time thisarticle was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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