* Deal conditional on undertaking from Elster's top shareholder
June 18 (Reuters) - British buyout group Melrose Plc is in talks to buy Germany's utility meter maker Elster Group SE for $2.3 billion, the two companies said on Monday.
Melrose, which buys underperforming manufacturing businesses and turns them around before selling them, could offer $20.50 per Elster's American Depository Share, a 25 percent premium to the German company's closing price on Friday.
Melrose, however, said it would not go ahead with the acquisition without a recommendation from Elster's board or an undertaking from Elster's largest shareholder, Rembrandt Holdings.
Rembrandt, which has a 62 percent stake in Elster, is owned by private equity firm CVC Capital Parnters.
Melrose's announcement comes nearly a year after the company walked away from toolmaker Charter International in the face of a higher offer from U.S. company Colfax Group.
Shares in Melrose closed at 382.5 on Friday on the London Stock Exchange.
(Reporting by Abhishek Takle in Bangalore; Editing by Don Sebastian) Keywords: ELSTERGROUP OFFER/
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