Japanese brewer Asahi has recouped about one-sixth of the $1.2 billion it paid for Independent Liquor after reaching a settlement with Pacific Equity Partners, Unitas Capital and their insurers in one of Australia's largest commercial damages cases.

The $199 million settlement, flagged by Fairfax Media in March, represents about 30 per cent of the $700 million ($500 million damages, plus interest) Asahi was seeking from Pacific Equity Partners and Unitas when it launched the court action last year, alleging the private equity firms had lied about the profitability of Independent Liquor (IL), forcing it to pay too much.

The agreement will enable Asahi to recoup some of its original investment.

Lawyers say the case, which was brought under consumer laws, threatens to undermine confidence in commercial contracts and will force vendors to be more cautious about earnings forecasts and representations to buyers.

"It allows them [buyers] to circumvent the whole contract process," one lawyer, who was not involved in the case, said.

"I'm delighted it's over," a lawyer involved in the case said on Monday after the $199 million settlement was announced.

"It's a fair settlement in that no one is happy; it's all about shared degrees of pain."

The settlement, one of the largest in Australia and New Zealand, could also lead to higher directors' liability insurance premiums.

It is understood that three warranty and indemnity insurers – AIG Insurance New Zealand, Beazley Solutions and Allied World Assurance – have agreed to pay about $138 million of the settlement. PEP and Unitas will pay the balance.

However, King & Wood Mallesons partner Greg Golding said one isolated incident like this was unlikely to "move the dial"  in a competitive market.

Asahi bought Independent Liquor from PEP and Unitas for $NZ1.5 billion ($1.2 billion) in 2011, outbidding rivals such as Suntory to secure a foothold in the Australian and New Zealand alcohol market.

PEP and Unitas made about 1.5 times their initial $600 million equity investment. However, within 12 months of taking ownership, Asahi, which also owns soft drink bottler Schweppes, discovered that the business was far less profitable than it claimed it had been led to believe.

In a claim filed in the Federal Court in February last year, Asahi alleged that PEP and Unitas had misrepresented the financial position of IL by "significantly inflating the earnings before interest, tax, depreciation and amortisation during the sale process and Asahi's due diligence".

Asahi said IL's forecast earnings for the 12 months to September 30, 2011, should have been $NZ83 million, not the $NZ125 million the vendors had estimated, and alleged that earnings were brought forward by "channel stuffing", or pumping inventory into the system.

PEP and Unitas  denied the claim, saying Asahi's accusations were untrue and any loss suffered was due to Asahi's failure during due diligence. The private equity firms also filed a cross claim against two senior IL executives, alleging they had prepared the profit forecasts.

But as the hearing was due to commence last month, Asahi reached an agreement with PEP and Unitas to settle the case. Asahi wrote down goodwill on the acquisition by $464 million in 2012. It will report the settlement as "extraordinary income" this year.

Asahi's acquisition of IL followed an unprecedented buying spree by Japanese drinks companies for Australian food and beverage assets during the financial crisis.

In 2008, Asahi outlaid $1.18 billion, or 15.2 times earnings, for soft drink and juice maker Schweppes, and Suntory bought Frucor Beverages for $1.28 billion, or 14 times earnings.

Kirin bought Dairy Farmers for $884 million in 2008 after forking out $2.8 billion for National Foods in 2007.

Asahi also bought P&N Beverages' water and juice business for $188 million and New Zealand juice maker Charlie's Group for $NZ129 million in 2011.

All three Japanese companies have struggled in recent years to achieve satisfactory returns on their investments.