Tesco could face legal action over fall in share price
Tesco is facing potential legal action from institutional shareholders following the £263m accounting scandal uncovered last autumn.
The Tesco Shareholder Claims (TSC) group said it plans to bring action against the group after it admitted it had overstated profit expectations.
It said the accounting scandal had caused "a permanent destruction of value to shareholders" and would seek damages on behalf of investors.
TSC's lawyers said when the misstatement was admitted on September 22, shares fell to a 14-year low of 164.8p, although they have since recovered to around 244p.
At the time the misstatement was estimated at £250m, but was later found to be £263m.
TSC said that although it backs the turnaround strategy of the new management, had the account scandal not happened the current share price would be materially higher.
The group said it expects its claim to be in the region of 50p to 70p a share. Tesco has over eight billion shares listed, so the proposed claim could run into billions of pounds.
Tesco declined to comment.
TSC said it was in discussions with leading institutions in the UK, Europe and the US about joining the claim on a no-win, no-fee basis, but it could not name significant City groups that have joined its claim.
TSC 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."
The affair is also being investigated by the Serious Fraud Office.