(Adds background, settlement details)
Dec 7 (Reuters) - New Zealand's a2 Milk Company Ltd ATM.NZ said on Thursday it had reached a settlement with Australia's Lion Dairy & Drinks Pty Ltd over allegations of misleading packaging and advertising.
The two milk companies have agreed they will not proceed with cases against each other, a2 Milk said in a statement to the stock exchange.
A2 Milk had filed a case with the Australian Federal Court in June 2016 alleging Lion Group, a unit of Japan's Kirin Holdings 2503.T , had made misleading and deceptive packaging and advertising claims on its products.
Following this, Lion filed a counter-claim challenging the way the New Zealand company promoted the a2 Milk brand.
"The parties are very satisfied with the outcome and will remain focused on building and maintaining the strength of their individual brands," a2 Milk said.
The terms of the settlement were confidential, a2 Milk added.