The settlement over Knut marks the end of an ongoing dispute between the Berlin Zoo and the Neumuenster Zoo over rights to the bear and revenue generated by merchandise bearing his image.

Knut became a global media sensation when his mother rejected him at birth in the Berlin animal park, though he never officially belonged to them. His father, Lars, had merely been on loan to Berlin for mating, and a contract had pre-determined that his first-born offspring, which happened to be Knut, would belong to Neumuenster Zoo.

However, neither zoo could have predicted just how beloved and lucrative the fluffy, white cub would become. Since his birth, tourists and camera crews haven't been able to get enough of the orphaned bear who had to be hand-raised and bottle-fed by zoo staff. Merchandise with the bear's image, including - stamps, candies, and toys - has flown off the shelves.

In 2007, Knut brought in more than five million euros in extra revenue to the Berlin Zoo and Neumuenster sued for a slice of the earnings.

However, judges urged Berlin to buy the bear instead. Following an initial request of 700,000 euros for Knut, Berlin Zoo officials said they were only willing to pay Neumuenster 350,000 euros, “the going rate for polar bears”.

The final settlement of 430,000 euros means that Berliners can now rest assured that the now three-year-old Knut - the first polar bear to be born and raised there in over 30 years - will remain in the capital permanently.

vj/afp/ap/dpa

Editor: Chuck Penfold