* Toymaker to record $72 million recovery

* Settlement related to Rose Art purchase

* Shares up 39 pct at 67 Canadian cents (Recasts, adds company comments; in U.S. dollars unless noted)

By Scott Anderson

TORONTO, Nov 9 (Reuters) - Toymaker Mega Brands (MB.TO: Quote, Profile, Research) and the former owners of a toy company it bought have both claimed victory in a messy court case dating back to 2006 involving deadly children's toys.

Montreal-based Mega Brands said on Monday that it would book a $72 million recovery when it reports its quarterly results after it settled a legal action related to the takeover of Rose Art Industries, which Mega Brands bought from the Rosen family in 2005.

The Rosens filed suit in 2006 claiming earnout payments and damages related to the deal for New Jersey-based Rose Art. Mega Brands countersued, claiming the Rosens withheld and misrepresented information about serious defects in Rose Art's Magnetix line of construction toys.

One child died and 27 others were seriously injured after swallowing small, powerful magnets that came loose from the Magnetix toys, which were acquired as part of the takeover of Rose Art.

Under the terms of the settlement, Mega Brands will receive about $17.2 million. The Rosens forgo all claims for additional consideration, totaling $54.8 million.