Tesco to pay $269m for UK scandal
Agreements come retailer faces growing shareholder opposition to its £3.7b bid for UK wholesaler Booker Group
Tesco Plc agreed to pay £214 million ($269 million; Dh986.33 million) to resolve regulatory probes into a 2014 accounting scandal that prompted a boardroom housecleaning and an overhaul of the UK grocer’s supplier relations.
Tesco said its UK unit will pay £129 million under a deferred prosecution agreement with the Serious Fraud Office, subject to court approval, and £85 million to compensate investors under a separate settlement with the Financial Conduct Authority.
The agreements come as Tesco faces growing opposition from shareholders to its £3.7 billion bid for UK wholesaler Booker Group Plc, which supplies restaurants and operates convenience stores.
Schroders Plc and Artisan Partners Asset Management Inc, which together own 9 per cent of Tesco, said last week that they want the grocer to focus on its recovery from the accounting scandal rather than striking out in a new direction.
Tesco said it expects to record a one-time charge of £235 million to cover the penalty, compensation and related costs. Investors who bought shares between August 29 and September 19, 2014, will be eligible for compensation of 24.5 pence a share, plus interest.
Tesco shares were down 0.4 per cent in early trading in London. Booker fell as much as 3.2 per cent to 193.6 pence, about 6 per cent below the value of Tesco’s offer.
Tesco announced in September 2014 that it had overstated profits by £263 million, a figure that was increased to £326 million following an independent audit. The FCA has said it’s not suggesting that the Tesco board knew, or could reasonably be expected to have known, that the information contained in that trading statement was false or misleading.
Tesco and the SFO will seek final court approval for the regulatory deals on April 10.
Chief executive officer Dave Lewis said Tesco would defend itself against two shareholder lawsuits. The outstanding cases relate to time periods outside the 2014 time window identified by the FCA.