Tesco is facing potential legal action from institutional shareholders following the £263m accounting scandal uncovered last autumn.
The Tesco Shareholder Claims (TSC) group, backed by US law firm Scott + Scott, 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.
The law firm 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.
Details of the scandal, which involved rebates from suppliers being moved around to different periods on the company’s balance sheet, emerged just weeks into the tenure of new chief executive Dave Lewis, after sliding sales prompted the departure of predecessor Philip Clarke.
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.
Scott + Scott said it has already brought a similar claim against Tesco in the US. TSC in the UK will be represented by the McGuire Woods law firm.
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.”