PARMALAT SpA, Italy's biggest dairy company, yesterday agreed to settle a shareholder lawsuit in the United States by paying investors stock with a market value of almost 24 million euros (US$37 million).

Parmalat, based in Collecchio, Italy, also will pay as much as 1 million euros in notification costs to resolve the multibillion-dollar suit filed in a federal court in New York, the company said.

"The news is surely positive," said Andrea Paladini, an analyst at Banco Santander SA in Milan. Paladini said he had forecast Parmalat would have to pay out 10 times as much. "The amount to be paid according to the settlement is significantly lower than expected," he told Bloomberg News.

Parmalat collapsed in December 2003 in the country's largest bankruptcy, later disclosing more than 14 billion euros of debt, about eight times more than reported by its former management.

Italian prosecutors filed criminal charges after discovering that the company had never earned a profit after its stock market listing in 1992, though it reported earnings every year.

"The removal of the class action as an issue in return for a nominal payment removes a cloud that has been hanging over the stock," said Richard Holloway, an outside spokesman for Parmalat. The court still must approve the settlement.

Parmalat investors lost as much as US$8 billion, lawyers for the investors had claimed in the suit.