Arconic tumbles on news it sold flammable panels used at Grenfell | Reuters
Shares in Arconic Inc fell as much as 11.3 percent on Monday after Reuters reported it had supplied the combustible cladding used for London's Grenfell Tower, the site of a deadly fire, despite publicly warning the panels were a fire risk for tall buildings.Shares in Arconic, formerly known as Alcoa, were on track for the biggest one-day percentage decline since Nov. 1.
Shares in Arconic Inc fell as much as 11.3 percent on Monday after Reuters reported it had supplied the combustible cladding used for London's Grenfell Tower, the site of a deadly fire, despite publicly warning the panels were a fire risk for tall buildings.Shares in Arconic, formerly known as Alcoa, were on track for the biggest one-day percentage decline since Nov. 1. The stock was last down 6 percent at $24.01 after hitting a low of $22.65. Trading volume was 1.8 times the 10-day moving average. Seventy-nine people died in a blaze at the Grenfell Tower block on June 14. Six emails sent by and to a sales manager for the company have raised questions about why it supplied the cladding, Reuters reported on Saturday.
"The issue is they supplied material that was used above their own marketing materials suggested limit," said Seaport Global Securities LLC analyst Josh Sullivan. "The concern is around the ultimate liability. You have one of the largest fires in UK history and they're searching for somebody to be at fault."
Sullivan noted that UK law was not as clear cut on the issue so it would be hard for Arconic investors to estimate any resulting liabilities.The Reuters report cited emails from 2014 between Deborah French, Arconic's UK sales manager, and executives at the contractors involved in the bidding process for Grenfell's refurbishment contract.
Arconic said in a statement it had known the panels would be used at Grenfell but that it was not its role to decide what was or was not compliant with local building regulations. The Association of British Insurers said on Sunday it had warned in May that combustible external cladding on high rises could cause fire to spread and that it has been calling on the UK government to review building fire safety regulations since 2009.Cladding panels are often added to the exterior of buildings to insulate them and, particularly in the case of ageing tower blocks, to improve their external appearance. The panels vary in terms of their fire resistance depending on their intended use. (Reporting by Sinead Carew; Editing by Jeffrey Benkoe)
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