US cable TV giant Comcast has made a formal £22bn bid for Sky, which values the broadcaster at £12.50 a share.
The move threatens Rupert Murdoch’s attempts to take full control of the pay-TV group.
His 21st Century Fox had already agreed to buy the 61% of Sky it does not already own, an offer worth about £19bn.
But after the new Comcast move, Sky said it was withdrawing its recommendation for the Fox bid.
“The Independent Committee of Sky welcomes today’s announcement by Comcast of its firm intention to make a £12.50 per share pre-conditional cash offer for Sky,” it said.
“As a result of the announcement of this higher cash offer, the Independent Committee is withdrawing its recommendation of the offer announced by 21st Century Fox on 15 December 2016 and is now terminating the co-operation agreement entered into with 21st Century Fox on the same date.”
Comcast is the biggest US cable TV firm, and owns the broadcast TV network NBC and Universal Pictures.
“We are delighted to be formalising our offer for Sky today,” said Comcast chief executive Brian Roberts.
“We have long believed Sky is an outstanding company and a great fit with Comcast. Sky has a strong business, excellent customer loyalty, and a valued brand. It is led by a terrific management team who we look forward to working with to build and grow this business.”
Comcast said its bid offered a premium of approximately 16% to the 21st Century Fox offer of £10.75 for each Sky share.
The US firm had first proposed an offer at the same, £12.50 a share, price in February. It said it would continue to engage with Sky’s independent directors with a view to obtaining a recommendation for its deal.
Comcast added that it planned to agree a number of legally-binding commitments with regard to Sky and in particular for Sky News.
And it also said it would commit to keeping the group’s Osterley headquarters in west London for at least five years.
Mr Roberts said: “With its 23 million retail customers, leading positions in the UK, Italy, and Germany, and its history of strong financial performance, we see significant opportunities for growth by combining our businesses.”
He added: “We also understand the role that Sky plays in UK society and in its customers’ lives and we are determined to be responsible and trusted owners of Sky.”
An investors note from financial analysts Liberum said: “We think Fox/Disney – as a counterbid from Fox will likely mean agreeing it with Disney who are bidding for certain Fox assets including Sky – will counterbid, but we see 1375p as a limit for the counterbid.”
What is Comcast?
Comcast is a US multinational media and telecommunications giant.
Its cable TV business is one of the largest in the US, while Comcast Cable also sells internet and phone services.
It owns NBCUniversal, which has news, entertainment and sports cable networks such as NBC and CNBC, as well as film giant Universal Pictures.
Dreamworks Animation, which has made films including Shrek, Madagascar and Kung Fu Panda, is a subsidiary of Universal Pictures.
Source: BBC News