Tesco Dodges a Bullet - £129m Fine to Avoid SFO Prosecution and £90m CompensationCompanies / Tesco Mar 28, 2017 - 07:43 AM GMT
Britain's largest retailer, near triple the size of its nearest competitor Sainsbury manages to dodge a bullet by being fined £129m as part of a DPA (Deferred Prosecution Agreement) with the SFO (Serious Fraud Office) for its 2014 false accounting scandal.
Which means that Tesco avoids a formal prosecution and that the fine+ investor compensation is about half what it could have been with some estimates ranging as high as £500m, perhaps the SFO took Tesco's distressed state into consideration as the super market giant had been in meltdown, it's stock price having collapsed by 60% from its high and having lost £10 billion in annual revenues to it's competitors.
Whilst holders of Tesco shares have been compensated to an estimated £90m (including interest) for those who bought shares on the basis of false accounting in 2014. Thus Tesco is taking an approx hit of £220m today.
At £1.89 the Tesco share price is trading at LESS than 50% of its 2013 high. That's a 50% LOSS of stock market value over the past 4 years, valuing the super market giant today at approx £15bn. Whilst today's fine + investor compensation coming in at the lower end of estimates should give the Tesco stock price a short-term bounce. However, for Tesco's longer-term prospects see my recent video -
Whilst my previous video in this series explained why the UK retail sector faces a perfect storm of rising prices, falling consumer disposable earnings and haemorrhaging customers to the discounters, that could even result in a Woolworth's moment...
By Nadeem Walayat
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