Manchester United manager Alex Ferguson has settled his dispute with Irish racing tycoon John Magnier over stud rights to record-breaking racehorse Rock of Gibraltar, a source close to the negotiations said on Friday.

The source told Reuters that Ferguson had accepted a deal for significantly less than half of the stud fees for the horse, estimated to be worth around 100 million pounds ($181.9 million), which his legal case demanded.

Ferguson, who had been under increasing pressure as Magnier and his partner J.P. McManus ratcheted up their shareholding in the club to nearly 29 percent through their investment vehicle Cubic Expression, contacted the Irishman two weeks ago in a bid to negotiate a deal.

The source said Ferguson had now accepted the offer made by Magnier before the Manchester United boss took legal action of stud nominations to the value of an estimated 2.5 million pounds.

Under the deal Ferguson will withdraw his legal action and all future claims to the Rock of Gibraltar.

Ferguson's dispute with Magnier, arguably the most powerful figure in the world bloodstock business via his County Tipperary-based Coolmore Stud, had struck at the heart of England's most powerful soccer club.

In January, Magnier and McManus turned up the heat on the 62-year-old Ferguson, winner of eight English premier league titles since arriving at Old Trafford in 1986, by announcing that they opposed a long extension to his contract and forcing the English champions to announce an internal review of recent transfers.

United eventually bowed to pressure from the club's largest shareholders and Ferguson signed a one-year rolling contract which will start from June 30, 2005, when the Scot's previous three-year contract runs out.

The club also agreed to a review of transfer deals after Magnier and McManus warned United they might demand an independent audit.

In February Ferguson complained of what he described as "distressing" treatment and that his son Jason, a players' agent, had also had "a terrible time", claiming in newspapers that his mail and binliner bags had been stolen.

United fans have leapt to the defence of Ferguson over what they perceive to be his poor treatment by the Irish racing tycoons, with some threatening to protest against Magnier's involvement in this month's prestigious Cheltenham Festival race meeting.