Handbag makers LVMH and Hermes have been taking each other to court for four years.
Their feud began in 2012 after it was disclosed that LVMH, whose handbag brands include Louis Vuitton, Dior and Givenchy, had built up a 17 per cent stake in Hermes and proceeded to purchase further shares.
It made the investment through a series of equity derivatives instead of straightforward share purchases, which prevented it from having to declare them.
Hermes, the 177-year-old maker of Birkin and Kelley handbags, vehemently protested at having its arch-rival as its biggest external shareholder.
But now the two companies have called a truce, after LVMH agreed to relinquish most of its 23.2 per cent in Hermes. It has also agreed not to buy shares in Hermes for five years.
Under the agreement, LVMH's stake in Hermes will be redistributed among institutional investors and shareholders.
LVMH, the biggest luxury goods company in the world, is run by billionaire Bernard Arnault, while Hermes is still controlled by its founding family. The disagreement pitted two of France's wealthiest families against each other.
Shares in Hermes declined by as much as 10 per cent following the news, and finished the day 3.4 per cent lower than yesterday. Shares in LVMH, meanwhile, went up by 2.9 per cent.