The directors of both companies have reached an agreement at £10.75 per share in cash – putting an overall value of Sky at £18.5bn. Fox already holds a 39 per cent stake in Sky.
But Sky said “certain material offer terms remain under discussion and there can be no certainty that an offer will be made by 21st Century Fox”.
Rupert Murdoch is the executive chairman of 21st Century Fox, having previously been chief executive and chairman of the company since its inception as News Corporation in 1979. His sons James and Lachlan are chief executive and executive chairman of the company.
News Corporation was split into two distinct companies – new News Corporation, comprising the newspaper and publishing side of the business, and 21st Century Fox, representing the entertainment side of the business – in 2013.
News Corporation withdrew a takeover bid for Sky in 2011, at the height of the phone-hacking scandal, with the deal coming under regulatory scrutiny.
Ian Whittaker, a media analyst at Liberum, said on Friday afternoon that he did not believe this deal would be subject to a regulatory block.
He said in a note: “The UK government is keen to promote investment in the UK post-the Brexit vote. We doubt therefore it would want to veto what could be viewed as a major sign of confidence in the UK market.”
He also suggested the split of 21st Century Fox and News Corporation would make the deal less likely to be blocked.
Sky said its directors had been advised by Morgan Stanley, PJT Partners and Barclays and have said they would be willing to advise the deal to shareholders.
The offer would represent a 40 per cent premium on Sky’s closing share price on 6 December and 36 per cent on 8 December.
Sky’s share price was up 30 per cent to £10.25 per share shortly after it announced the talks.