The ink’s barely dry on Sir Martin Sorrell’s purchase of Dutch digital-production agency MediaMonks, but already the cold war between WPP and its former CEO has taken a decidedly frosty turn.

As reported on B&T yesterday, Sorell’s private equity firm S4 Capital outbid both WPP and Accenture to snare MediaMonks for a reported $A472 million.

However, WPP has branded the sale as “unlawful” due to the fact that Sorrell had been “heavily engaged” in WPP’s bid when he was running the company up until April. It also believes that Sorrell agreed to a non-compete when he left which this contravenes.

WPP has said it will now withhold $36 million in dividends owed to Sorrell relating to share bonuses. Sorrell remains a significant shareholder in WPP, with much of his own wealth tied up in the stock of the company

However, Sorrell has labelled claims that S4 was competing head-to-head against WPP as “ridiculous”.

“We’ve probably grown from being a peanut to a coconut with (the purchase of) MediaMonks,” Sorrell told Press Association yesterday.

“We are a bigger animal now, but still to say a $US20 billion company can be frightened of a peanut or a coconut seems to be ridiculous.”

However, WPP countered back in a statement via its London office: “WPP’s lawyers wrote to Sir Martin’s lawyers last week pointing out the breach of his confidentiality undertakings in his approach to MediaMonks after his resignation from WPP.

“Despite subsequent protestations from Sir Martin’s lawyers, we are well aware of the facts and he has jeopardised his LTIP (a long-term incentive plan) entitlement.”

Despite the threat of pending legal action hanging over it, it has not deterred MediaMonks’ owners from taking Sorrell’s cash.

It’s understood S4 and MediaMonks will now merge to become a “unitary” company and will “run on a single P&L basis, as clients are increasingly demanding”.

Yesterday, MediaMonks issued a statement on the sale that read: “This represents a significant step in building a new age, new era, digital agency platform for clients. MediaMonks’ roots are totally in new media, and data, content and technology. Our next moves will be to build this platform further and to add meaningful data analytics and digital media buying.

“The objective behind the merger is to provide clients with digital services, which are agile, efficient, and of premium creative quality. The merger represents the first move by S⁴ Capital to create a new era, new media solution embracing data, content and technology, which meets client needs in an always-on environment.”