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UPDATE 1-WPP takes legal action in spat with Asatsu-DK over Bain offer

* WPP says Bain's offer undervalues Asatsu-DK

WPP seeking arbitration, and preliminary injunction from court

* Asatsu says WPP has said it plans to terminate their alliance (Recasts with WPP legal action)

By Junko Fujita

TOKYO, Nov 2 (Reuters) - An acrimonious spat between advertising giant WPP and its partner Asatsu-DK Inc over a $1.35 billion offer for the Japanese firm from Bain Capital has deepened, with WPP saying it was taking legal action.

Asatsu-DK is backing Bain's offer, but WPP, its largest shareholder with a stake of about 25 percent, and other shareholders have said the bid significantly undervalues the company.

The world's largest advertising group is seeking arbitration with a Japanese arbitration body and a preliminary injunction with the Tokyo District Court. In both cases it is asking for a declaration that Asatsu-DK's termination of their business alliance was invalid.

It also said it wanted a declaration that Asatsu-DK had no right to request or require WPP to sell its shares in the Japanese firm.

Asatsu-DK said last month it wanted to end the alliance and had asked WPP to tender its shares in the company to Bain.

The Japanese firm said on Thursday in a statement that WPP had notified it on Wednesday that it was planning to terminate their alliance, accusing Asatsu-DK of breaching their agreement with a hedging contract it had entered into with Morgan Stanley.

Asatsu-DK added that it did believe it had breached their agreement with the hedging contract.

WPP and Asatsu-DK formed their alliance in 1998 to set up joint ventures, cultivate clients together, and exchanged equity stakes. Asatsu-DK owns 2.43 percent of WPP.

A representative for Bain was not immediately available for comment.

(Reporting by Junko Fujita; Writing by Miyoung Kim; Editing by Edwina Gibbs)