Alex Ferguson has been spared the ordeal of a second legal dispute with John Magnier after discovering last night that Manchester United's majority shareholder is to abandon a possible claim for defamation as part of a "call-off-the-dogs" peace pact.

Magnier has contacted his lawyers in Dublin to inform them that, now he has reached an out-of-court settlement with Ferguson over the breeding rights for the retired racehorse, Rock of Gibraltar, he no longer wishes to seek damages over comments made at a press conference on January 30th.

The news will be of intense relief to Ferguson who had received written confirmation from Magnier's legal representatives that they were investigating his remarks about the impact of the Rock of Gibraltar case, and specifically allegations that letters and bin-bags had been stolen from the house of his son Jason.

In essence, their case was that Ferguson appeared to have implicated them, indirectly or not, in alleged criminal behaviour.

Lawyers for Magnier and his business partner JP McManus contacted United's board on February 4th to demand the tapes and written transcripts of his various newspaper, television and radio interviews. United's lawyers had acknowledged receipt of the threat but had withheld the transcripts.

Now the case is to be dropped, Ferguson will feel vindicated in his unerring belief it was merely part of Magnier's tactics to force him into backing down over Rock of Gibraltar before it reached Dublin's High Court, a long-term strategy that paid off last Friday when the manager initiated talks to reach a settlement.

Despite Ferguson receiving an up-front figure in the region of £2.5 million, it is a fraction of the entitlement for stud fees that he initially sought and can be seen only as a victory for Magnier and his associates. They have reiterated their desire to take an active interest in the club, predominantly by using their 28.89 per cent holding to appoint up to three representatives to the board, but will not be so aggressive in their demands.

Ferguson and his lawyers had intended to release a short statement yesterday confirming an end to the dispute but because of the amount of paperwork and legalities it has been delayed.