Prostrakan has ended its legal wrangle with its 12.5% shareholder Aventis with a payment of �9.15m (£7.77m) to settle a tax dispute.

Prostrakan has ended its legal wrangle with its 12.5% shareholder Aventis with a payment of 9.15m (£7.77m) to settle a tax dispute.

The Borders-based specialty pharmaceutical group disclosed at the end of March a potential liability of 13.4m from the claim, sending its shares down 11% to 53p.

However, the news came as little surprise to company-watchers yesterday, with the stock unchanged at 88p.

The dispute arose from a transaction between the two companies in 2004, when ProStrakan acquired Proskelia from Aventis.

At the time it gave Aventis undertakings around the disposal of shares in Proskelia which might trigger a tax liability, and a related indemnity, the Scottish company said.

However, ProStrakan went on to sell Proskelia to Galapagos in 2006. It made provision in its accounts for the potential liability and said in March it had been "in discussions" on the matter with Aventis. The settlement falls within the provision.

ProStrakan disputed with French tax authorities that any tax liability did arise as a consequence of the sale, or if it did that it was correctly calculated.

It began legal action in France 15 months ago, claiming any liability should be "for a materially lesser amount".

ProStrakan chief executive Wilson Totten said: "I am pleased that we have been able to reach a satisfactory agreement with Aventis, within the provision that we had already made in our accounts and within our available cash reserves."

Totten added: "This is a pivotal year for ProStrakan together with other recent positive announcements on the early French launch of Abstral and the imminent grant of our US patent for Sancuso, I am delighted to be able to report continued strong progress towards true financial independence for the business."

Singer Capital Markets said the settlement would "not impact on ProStrakan's ability to successfully achieve sustainable profitability from 2010 onwards, or break even towards the end of 2009".