TOKYO (Reuters) - Advertising giant WPP (>> WPP Group) said it would be prepared to raise its stake in Japanese partner Asatsu-DK Inc (ADK) (>> Asatsu-DK Inc) to 33 percent from 25 percent if a disputed tender offer for the company by U.S. private equity fund Bain Capital failed.

ADK is seeking to end a two-decade-old business alliance with WPP, asking the world's largest advertising group to sell its shares to Bain in a $1.35 billion deal.

But WPP and other large shareholders, including London-based fund manager Silchester International and Hong Kong-based activist fund Oasis Management Company, have held out for a higher offer from Bain.

The latest move by WPP deepens an acrimonious spat over the deal between the long-time alliance partners. A 33 percent stake is just below a key threshold that would allow it to veto board decisions.

WPP this month took legal action against ADK, seeking arbitration and a preliminary injunction to uphold its stance that ADK's planned termination of their business alliance was invalid.

In a statement dated Nov. 15, UK-based WPP said it had been approached by other shareholders as well as ADK's management asking it to clarify its commitment to ADK in the event the tender offer failed.

"With the approval of the board and other shareowners we would also be prepared, as requested by some shareowners, to increase our shareholding in ADK to 33 percent," WPP said.

In addition, WPP said, it would "welcome the opportunity to engage constructively" with ADK's board to make sure the company was capable of increasing its value for the benefit of long-term shareholders.

ADK said it had not received WPP's statement and declined to comment.

ADK's shares were up 1.3 percent at 3,480 yen in morning trade on Thursday, slightly outperforming the broader Tokyo market.

Bain Capital is seeking a stake of at least 50.1 percent in ADK and has offered to buy shares for 3,660 yen a piece. Last week, it extended the period for the tender offer by about a week to Nov. 21 to give shareholders more time to consider the offer, given WPP's legal action.

Bain has said its offer is full and final.

ADK and WPP formed their alliance in 1998 to set up joint ventures and cultivate clients. They exchanged equity stakes but the Japanese firm says synergies from the tie-up failed to materialise.

(Reporting by Junko Fujita; Editing by Chang-Ran Kim and Stephen Coates)

Stocks treated in this article : Asatsu-DK Inc, WPP Group