Tesco’s share price rises after supermarket agrees $12m US settlement over profits blackhole
Tesco's share price climbed this morning, on the back of news that it has agreed to pay $12m (£8m) to settle a US class action lawsuit brought against it over the £263m profits blackhole discovered last year.
The supermarket denied wrongdoing, but agreed to pay the all-cash settlement, according to documents filed at the US District Court in Manhattan.
Shareholders hired litigation specialist Kahn Swick & Foti in March to represent "all persons or entities who purchased Tesco securities between 2 February 2014 and 22 September 2014 inclusive", claiming that the supermarket's accounting irregularities inflated the share price.
After the mis-statement was made public, the retailer's share price collapsed from 229p to a 14-year low of 164.8p.
The settlement is expected to yield an average recovery of 37 cents per American depositary share and 11 cents per F-share, before deducting fees and expenses. Kahn Swick & Foti plan to seek legal fees of up to 30 percent of the gross settlement fund.
Tesco said: "This agreement, if confirmed, will settle one of two claims before US courts arising out of the commercial income overstatement.
"The other claim is brought in Ohio by the remaining holders of ADRs equivalent to less than 0.2 per cent of the total issued ordinary shares of the company."
Tesco's share price was up 1.72 per cent to 171.4p in early trading.