FRANKFURT, March 16 (Reuters) - The city of Dresden approved a 40 million euro ($52 million) settlement of a billion-euro suit the eastern German city brought against Gagfah , sending the German real estate company’s shares higher.
The city council’s vote in favour of the deal is the last step necessary to approve the settlement, ending a months-long dispute in which Dresden demanded 1.1 billion euros from Gagfah.
Shares of Gagfah, whose biggest shareholder is U.S. investor Fortress, were up 9.2 percent at 6.28 euros by 1416 GMT, at their highest level in almost one year and outperforming a 0.1 percent gain by Germany’s mid-cap index.
Gagfah’s stock lost almost half of its value in 2011 but has risen by about 45 percent already since the start of this year.
Dresden already agreed at the beginning of March to settle the lawsuit, in which it charged Gagfah had violated tenant protection agreements.
The proposal narrowly passed in the city council, with 37 out of 71 votes cast backing the deal, after opposition from the Social Democrats (SPD) and the Green Party.
Gagfah remains the subject of legal action as the state prosecutors of the German city of Duesseldorf investigate charges of insider trading against four Gagfah executives, including Chief Executive Officer William Brennan.