Valeo has announced that it has agreed to propose the appointment of a representative of major shareholder Pardus Capital Management to its supervisory board.

Pardus, which owns almost 20% of Valeo, agreed in return not to raise its stake in the company beyond 20% of the capital and voting rights, Valeo said in a statement.

“The board of directors has decided to propose the appointment of Behdad Alizadeh to stand for election as a director of Valeo at the shareholders meeting to be held on June 20, 2008, pursuant to the terms of the agreement between the Pardus investment fund and Valeo,” Valeo said.

The agreement is the end of a protracted legal battle between the two parties. Pardus had been seeking two seats on the board and last year demanded eight.

Pardus wants to increase shareholder value by breaking up the company. Valeo CEO Thierry Morin has resisted Pardus having too much influence on the board because of a conflict of interest. Pardus is also the largest shareholder in Valeo competitor, Visteon. Morin has said he feared information from Valeo board meetings might be passed on to Visteon.

As part of the agreement Pardus has agreed not to seek management positions at any Valeo competitor, particularly Visteon or Delphi. In addition the Pardus representative on Valeo’s board will not participate in discussions about relations between Valeo and Visteon, and will not acquire more than 10% of the capital or voting rights of any Valeo competitor.