Tesco shareholders have launched a multi-billion pound legal action over the accounting scandal that blew a £263m “black hole” in the supermarket’s profits.
Lawyers have been appointed to represent European shareholders, including the vast majority of British pension funds, to sue Tesco over the scandal, accusing the company of permanently damaging the share price.
It is the latest headache for Dave Lewis, the new chief executive, and John Allan, the chairman, with Tesco facing investigations by the Serious Fraud Office, the Financial Reporting Council and the Groceries Code Adjudicator. Tesco Shareholder Claims is funded by the US litigation specialist Scott + Scott, which is already bringing a similar action against Tesco in courts in the United States.
The organisation is now seeking out institutional investors and hopes to sign up at least a third of the current shareholder register of 8 billion shares.
It is claiming the shares have permanently lost between 50p and 70p of their value, meaning the total bill could be as high as £1.9bn.
The British law firm McGuireWoods has been signed up in the UK to fight the case and several institutional investors are said to be interested. Although industry sources have suggested many could be waiting until closer to the six-year deadline to carry out any legal action, once the ongoing investigations are resolved. Another UK law firm, Stewarts Law, last year said it would launch a major legal action on behalf of shareholders seeking compensation for losses.
David Scott, a managing partner at Scott + Scott, said: “International institutions asked us to find a way to bring a claim in the UK which they can join. I am delighted to be part of this action which, given the strength of the case, is already attracting a lot of interest from shareholders in the UK and Europe.”
The group’s chairman, John Bradley, said: “Tesco is one of the widest held stocks in the UK and this loss has hit pension funds and investors across the UK and beyond. We look forward to bringing this claim to court.”
Tesco declined to comment. However, sources close to the company pointed out that although the shares did initially plummet as low as 164.8p, they have since recovered. Yesterday they closed 2.95p down at 243.65p.
Tesco is undergoing widescale change amid a boardroom reshuffle. Its senior non-executive director Patrick Cescau, who announced his decision to leave this week, will be replaced by Richard Cousins.
Mr Lewis is overseeing a major redundancy programme across its head office, including at director level, as it moves from Cheshunt to Welwyn Garden City. This has led to suggestions that too much talent has been lost. However, industry figures have suggested the supermarket is starting to recover sales.Reuse content