Melrose shares climb on Garden Grove plant reopening timeline

Melrose Industries' shares surged by 8% on Tuesday following the announcement that GKN Aerospace, the company's parent, aimed to resume full production at its Garden Grove facility by September 28. The reopening timeline came in the wake of a May incident at the plant, where an overheating chemical tank raised concerns about a potential explosion, leading to the evacuation of 50,000 nearby residents for several days.

California's district attorney announced on Monday that they would close their criminal investigation into the incident without bringing any charges. While the exact extent of potential expectation costs remains uncertain, a proposed $100 million program to compensate local residents provided some insight into the overall financial impact, which, though significant, is deemed manageable according to RBC Capital analyst Mark Fielding.

Melrose reported in its July half-year results that the facility was operating at approximately 50% capacity, leading to a reduction in sales, profit, and cash flow by around £6 million per month.