Some kind of diff variant might be helpful, eg wdiff
If you decide to devise your own algorithm, you're going to have to address the situation where a sentence has been inserted. For example for the following two documents:
The men are bad. I hate the men
and
The men are bad. John likes the men. I hate the men
Your tool should be able to look ahead to recognise that in the second, I hate the men
has not been replaced by John likes the men
but instead is untouched, and a new sentence inserted before it. i.e. it should report the insertion of a sentence, not the changing of four words followed by a new sentence.