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Melrose Industries Shares Rise as US Probe on Chemical Incident Wraps Up

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Melrose Industries Shares Rise as US Probe on Chemical Incident Wraps Up

Melrose Industries (MRO.L) shares jumped more than 8% in early morning trading on Tuesday after the company escaped criminal charges linked to a chemical incident in May at unit GKN Aerospace's Garden Grove site in the US.

The London-listed aerospace manufacturing company said in a same-day filing that the Orange County District Attorney's Office determined that no criminal charges will be filed when it closed the probe into the incident.

The Garden Grove site in California was evacuated in late May due to damage in a storage tank containing methyl methacrylate, a chemical used in the manufacture of high-strength aerospace acrylic materials. Mandatory evacuation of the area was lifted on May 26, with a restricted zone kept in place around the facility.

Reports estimated that the incident affected more than 50,000 nearby residents. Melrose said its GKN Aerospace subsidiary fully cooperated with the investigations and fully decommissioned the tank at the center of the incident in addition to further investments in improving safety at the plant.

To assist with evacuation-related costs, Melrose Industries and Orange County District Attorney Todd Spitzer unveiled a claims program of up to $100 million for affected residents and businesses. The program is expected to take effect in the coming weeks and to remain open through 2027. The company said it will separately resolve claims by emergency services agencies and potential civil enforcement penalties outside of the program.

The plant produces and tests military canopies, cockpit windows and passenger windows for planemakers Boeing (BCO.F) and Airbus (AIR.PA, AIR.F). Melrose Industries intends to resume full manufacturing operations at the site on Sept. 28, with full capacity expected by the fourth quarter.

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