Manchester United manager Sir Alex Ferguson yesterday launched a High Court action against one of his employer's biggest shareholders, Coolmore stud boss Mr John Magnier, over the ownership of the lucrative stallion Rock of Gibraltar.

A spokesman for Coolmore last night confirmed that it and Mr Magnier had been advised that Sir Alex had formally begun legal proceedings. The business issued a statement saying: "Coolmore Stud and John Magnier consider the action to be without merit and it will be vigorously defended."

It added that it would not comment any further as the dispute was a legal matter.

It is understood that Sir Alex has filed the necessary papers with the court to begin the action. He is seeking a ruling that he owns half of Rock of Gibraltar and is entitled to half the profits he earns at stud.

The horse was European champion over a mile and could generate a turnover of between €8 million and €9 million a year at stud.

His current nomination fees are €65,000 for each broodmare that he "covers". Figures from Weatherbys show that he serviced 168 mares last year.

On average, 70 per cent of such matings produce a live foal. Stud farms are not paid for matings that do not produce live offspring. If he covers the same number of mares, he should generate more than €8 million in turnover. The profits earned from stallion fees are tax-free in the Republic.

Sir Alex's move yesterday was the latest twist in a dispute that has been brewing since the beginning of the year. Rock of Gibraltar ran in his colours and he was registered as a part owner with Ms Sue Magnier. He did not pay for a share, but says that Mr Magnier gave him half ownership in the horse, which would naturally entitle him to half the profits he generates at stud.

However, it is understood that Mr Magnier maintains that Sir Alex was offered a share of Rock of Gibraltar's prize money, or the value of one nomination fee a year and that he chose the latter.

The horse began running in his colours midway through 2001, when he was a two-year-old. His value as a stallion skyrocketed when he entered the record books last year after capturing seven consecutive group one races, including the Irish and English 2,000 Guineas.

Mr Magnier and Mr JP McManus are the largest shareholders in Manchester United plc through an offshore vehicle, Cubic Expression.