A statement released on behalf of the pair, stated the dispute – which began over gifts given to a family friend – was over.
Jean-Paul Agon, CEO of L'Oréal, said: "I am very pleased that our shareholders, Mrs Liliane Bettencourt and Ms. Françoise Bettencourt Meyers, have reconciled.”
“This resolution is also very positive for our Group and its employees, especially since the family has expressed a strong and united commitment to the company."
Speaking to the Associated Press, lawyer Olivier Metzner said: "There is no more case as far as we are concerned.”
L'Oreal cosmetics heiress Liliane Bettencourt, 88, and her daughter Francoise Bettencourt Meyers met after a long estrangement, according to Metzner adding that all procedures would be brought to an end given the family reunion.
Case erupted over lavish gifts
Liliane Bettencourt had gradually given away around €1bn in gifts and life insurance contacts to society photographer Francois-Marie Banier.
Her generosity prompted her daughter, Francoise Bettencourt-Meyers, who sits on the L’Oreal board, to file a suit accusing Banier of manipulating a vulnerable person.
Metzner added yesterday that Banier "has renounced many of the benefits he received. And we are renouncing any procedure regarding him."
Liliane Bettencourt had also expressed fears that the business could be destabilised because of the feud. She has now expressed her delight at being able to move on past this, in a joint statement issued yesterday.
"The decision that Francoise and I have taken offers me hope. It meets my wish to see the family united," she said.
Suggested involvement of government officials
The on-going saga even took on a political edge with accusations that the heiress may have been evading taxes with the help of the wife of a French politician.
Tapes leaked to the French press earlier in the year by Bettencourt’s former butler suggested, according to press reports, that she may have been evading taxes on a certain section of her fortune.
In addition, some suggested that the tapes highlighted the possible involvement of the wife of France’s employment minister Eric Woerth, who was at the time the conversations were recorded, the country’s budgetary minister, and has since stepped down.
As the plot thickened, the finger of responsibility ultimately pointed to French president Nicolas Sarkozy, who then went on live French television to deny allegations that his reigning political party had illegally received funds from Bettencourt.