Tesco Plc share price up, Chairman Broadbent considers resignation after accounting investigation

According to people with knowledge of the matter, the Chairman of Tesco Plc Mr. Richard Broadbent would consider stepping down after a probe into the companys recently alarmed accounting malpractices is finalized. The UK grocer has been put under a lot of pressure and close monitoring over the last couple of weeks since it called in outside auditors to investigate an overstatement of its first-half profit forecast.

Mr. Broadbent could not be reached immediately for comment. However, he refused to make any speculations on his future in a September 22nd statement, when the company revealed the accounting error. “Right now, I’m going to continue dealing with the issues as they arise in this important company,” he said.

Tescos new Chief Executive Officer Dave Lewis said last month that the supermarket chains £1.1bn first-half profit forecast, which was released several weeks earlier, had been overstated. An internal investigation was started and four of the retailers senior executives have already been suspended – Chris Bush, Carl Rogberg, John Scouler and Matt Simister. In addition, the company asked on Monday Kevin Grace, commercial director, to resign as part of the ongoing investigation.

Meanwhile, shares of Tesco had their heyday in almost half a year, boosted by speculations that buyout firm TPG Capital Management LP is considering a £2-billion ($3.2 billion) bid to acquire Tescos Dunnhumby data analysis division. Both Tesco and TPG did not comment.

In addition, Tesco decided to appoint two new non-executive directors – Mikael Ohlsson, former IKEA Group Chief Executive, and Richard Cousins, CEO of catering company Compass Group, who will start on November 1st.

Tesco Plc added 4.27% to trade at GBX184.30 per share at 13:37 GMT in London, marking a one year change of -49.09%. The company is valued at £14.36 billion based on Mondays close. According to the Financial Times, the 18 analysts offering 12-month price targets for Tesco Plc have a median target of GBX202.50, with a high estimate of GBX325.00 and a low estimate of GBX165.00. The median estimate represents a 14.57% increase from the previous close of GBX176.75.