Dive Brief:
- U.S. law firm Scott + Scott has requested that Tesco shareholders join the firm-backed group, Tesco Shareholder Claims Limited (TSC), which appears to be pursuing billions of pounds in compensation for losses due to Tesco's overstatement of profits last year.
- In October, Tesco admitted to overstating first-half 2014 profits by 263 million pounds, which sent the retailer's market value tumbling until its share price dropped to a 14-year low.
- TSC claimed that Tesco's profit overstatement, "caused a permanent destruction of value to shareholders," Reuters reports.
Dive Insight:
According to TSC, the damage is done in terms of Tesco's market value, and shareholders deserve to be compensated for reckless behavior on the part of Tesco directors and senior managers. The group said, "A permanent destruction of value has occurred and had the accounting irregularities not taken place the share price, and value of the company, would today be materially higher," said TSC, Reuters reports.
Reuters wrote, "[TSC] said it expected the claim, open to any institutional shareholder that bought shares in Tesco prior to the firm's Sept. 22 announcement, to be in the region of 50-70 pence per share. Tesco has 8.1 billion shares listed, suggesting the claim could be for billions of pounds."