The a2 Milk Company has agreed to pay $62m to settle a major shareholder class action.

Investors who bought shares between August 2020 and May 2021 brought a class action lawsuit, claiming the dairy processor failed to properly disclose problems in its key China infant formula sales channels. During that period, the company issued multiple earnings downgrades, wiping billions off its market value. a2 Milk denies wrongdoing but said settling the case was in the best interest of shareholders to avoid the cost, uncertainty and distraction of a lengthy trial.

The settlement, which is one of the largest of its kind in Australia, still requires court approval. It will be fully funded by the company’s insurers, meaning no direct financial impact on a2 Milk’s balance sheet. The company said it remains focused on stabilising its China business and rebuilding investor confidence.