"We've been litigating for a while and we've compiled a compelling case against both companies. For its own reasons, and it should be applauded, Diageo has decided to recognise its legal and moral responsibility to these people.''
"Grunenthal is a company that for 50 years has protested that the whole thalidomide disaster was an unavoidable, unpreventable tragedy ... it's a myth.
"Diageo has effectively picked up the tab for Grunenthal and it's now really up to Diageo whether it goes after Grunenthal for a contribution.''
The financial distributions would be based on the severity of victims' injuries, Mr Magazanik said.
The settlement would need to be approved by Melbourne's Supreme Court, which was expected to happen in February, he said.
"Everyone's confident that it will take effect.''
Diageo director Ian Wright said the company was pleased to be able to resolve the claims through an out of court process.
"We believe that the settlement reached today is both fair and equitable to all involved in this very sensitive and difficult situation.''
Papamoa-based thalidomide victim Terry Wiles said although he was not involved with the class action, the news was "really amazing''.
While it was good to see Diageo step forward and take responsibility, the lack of accountability from Grunenthal was appalling, he said.
"I think they have no conscience whatsoever. It was always about money and they just don't want to deal with it.''
Grunenthal needed to "own up'' and "show some moral fibre'', he said.
***
* Thalidomide damaged unborn children when taken in early pregnancy.
* The drug was popular as a sleeping medication, sedative and morning sickness drug in the late 1950s and early `60s.
* Melbourne law firm Gordon Legal began thalidomide litigation in 2010 on behalf of lead plaintiff Lyn Rowe.
* Since then lengthy negotiations have followed for other Australian and New Zealand claimants.
* Litigation is currently underway against thalidomide manufacturer Grunenthal in the UK, USA and Spain.
