Shares in Melrose Industries (LSE: MRO) fell sharply in early trading on Tuesday, dropping as much as 7% before paring some losses, as investors reacted to an ongoing chemical incident at its GKN Aerospace facility in Garden Grove, California.
The FTSE-listed aerospace engineer issued a press release this morning providing an update on a thermal issue first identified on Thursday, 21 May, involving a storage tank containing methyl methacrylate (MMA) — a chemical used in the manufacture of high-strength aerospace acrylic materials — at the Southern California plant.
The incident prompted the Orange County Fire Authority (OCFA) to issue mandatory evacuation orders for portions of the surrounding community on Friday, 22 May, affecting tens of thousands of local residents amid fears of a potential explosion.
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By mid-morning in London, shares had recovered somewhat from their session low of 472.2p, trading around 483.7p — a fall of approximately 5.1% from the previous close of 509.6p, with volume already surpassing 2.3 million shares.
The company sought to reassure markets, noting that as of 6 pm local time on 25 May, authorities confirmed no injuries, leaks or contamination had occurred, and that the mandatory evacuation area had been “significantly reduced.”
GKN Aerospace said it is working closely with customers on operational recovery and supply plans following the disruption.
Despite the reassurances, investors appeared unnerved by the reputational and operational risks posed by the incident, as well as residual uncertainty over the tank’s status. Any prolonged disruption to the Garden Grove facility, a key site for aerospace acrylic component manufacturing, could weigh on production schedules and customer relationships.
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