The rival zoos did not give specifics on the “mutual agreement,” but Berlin tabloid daily B.Z. reported that the Neumünster Zoo will receive €430,000 in exchange for Knut.
A spokesperson for the zoo said the decision would be formally announced to the public on Wednesday.
In mid-May, the two zoos failed to reach an agreement before a Berlin court over rights to the bear and the some €6 million in revenue Knut has earned since 2007. Both the Berlin Zoo and Neumünster Zoo then agreed to continue with settlement talks. In the event negotiations failed, a regional court was set to issue a decision on September 1.
The Neumünster Zoo let the Berlin Zoo borrow Knut's father Lars in 1999 on the condition that the first-born cub from his union with mother Tosca would belong to Neumünster, and the zoo tried to claim rights to the lucrative polar bear.
He was the first polar bear to be born and mature in the Berlin Zoo in more than 30 years. Knut came into the international spotlight after his mother abandoned him and his brother on a rock in their enclosure.
His brother died shortly thereafter, but little Knut survived and was raised by the late zookeeper Thomas Dörflein. The cuddly bear became a worldwide sensation, spawning countless souvenirs, stuffed toys, books and even an animated film.