The long-running lawsuit over the sale of Sir Fraser Morrison's construction business to Anglian Water firm AWG was settled yesterday.
AWG had put in a claim for £130 million, alleging that Sir Fraser and Morrison Construction's former chief operating officer, Stephen McBrierty, inflated the true value of the Edinburgh-based business when it was sold to the utility for £263 million in 2000.
But AWG, Sir Fraser and Mr McBrierty said the lawsuit had been terminated and claims of misrepresentation withdrawn "on mutually agreed terms which will remain confidential".
AWG chief executive Jonson Cox said the agreement followed discussions with Sir Fraser and "an acceptable settlement proposition".
Sir Fraser said that he was "delighted" the matter had been resolved "to our mutual satisfaction".
The hotly-disputed case was due to start next week at the High Court in London and run for seven months.
AWG claimed that Morrison's £30.5 million profits forecast for the year to March 2001 turned into a £46.4 million loss after the sale.
It alleged "fraudulent misrepresentation" of the Morrison accounts in the run-up to the purchase.
The £130 million damages action was based on the difference between what AWG paid for Morrison and what it claimed the company was actually worth.
The case was dogged by controversy and was postponed in December because the judge set to hear it - Mr Justice Evans-Lombe - was a friend of 30 years of one of AWG's main witnesses, former AWG non-executive deputy chairman Richard Jewson.
Following objections from defence lawyers, the Court of Appeal ruled that Mr Justice Evans-Lombe should not hear the case.
AWG - owner of Kidderminster-based process engineers Purac - is valued at around £1.6 billion.
AWG is also four years into a five year contract to maintain 84,000 Birmingham council homes.