Tesco Reaches Agreement on $12 Million New York Lawsuit
26 November 2015 - 1:07PM
Dow Jones News
By Philip Georgiadis
LONDON-- Tesco PLC said on Thursday it has reached agreement in
principle to pay $12 million to settle a class-action lawsuit in
New York over an accounting scandal that tarnished the retailer's
reputation.
The lawsuit against Tesco and some of its former directors was
launched on behalf of the holders of the No. 1 U.K. grocery chain's
American depositary receipts, about 2% of its total shareholder
base.
The litigation came after Tesco admitted in September 2014 that
it had overstated its first-half profit for the year by GBP250
million ($378.1 million), which it later revised to GBP263 million.
The overstatement related to commercial income, which includes
promotional money, discounts and rebates from suppliers.
The U.K.'s Serious Fraud Office has opened a criminal
investigation into Tesco's accounting practices, the results of
which are expected soon.
This year, Tesco's board came under fire from shareholders over
what was described as the worst period in the retailer's history,
with the accounting crisis compounding poor results and a slump in
the share price.
Tesco shares, which have fallen nearly 33% since April, were up
0.8% to 170 pence in morning London trading on Thursday.
Tesco, which is in the midst of a turnaround plan under Chief
Executive Dave Lewis, said the settlement is subject to
confirmation by a New York court. There is no admission of
liability.
If completed, the settlement will clear up one of two claims
before U.S. courts which arose out of the accounting error. There
is another pending in Ohio, Tesco said.
(A version of this article originally appeared on WSJ City,
available for download from the Apple App Store.)
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 26, 2015 06:52 ET (11:52 GMT)
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