LONDON—The victor in a very public bidding war between 21st Century Fox Inc. and Comcast Inc. CMCSA +0.55% for British broadcaster Sky PLC is likely to be decided in private. U.K. corporate-takeover rules could require a sealed-bid auction—also known as a blind auction—to conclude what might otherwise become a never-ending game of ever-sweeter bids.
In such auctions, bidders submit secret offers to a third-party arbiter. They are common in all sorts of commercial transactions, including home sales, cellular-airwave auctions and bidding for professional athletes. They are very rare, however, when it comes to high-profile deal making involving a big public company. Sky is a British broadcasting giant with a stock-market value of £26.8 billion, or $35 billion. “The scale and magnitude of the potential auction is something we haven’t seen in recent history,” said Tyler Tebbs, a London-based analyst at Olivetree Financial Ltd., which focuses on analyzing deals. Britain’s Takeover Panel, a regulatory body that polices corporate deals, last conducted one in 2008. Wisconsin-based Manitowoc Co. beat Illinois Tool Works Inc. with a $2.7 billion bid for British food-equipment manufacturer Enodis. Rupert Murdoch’s 21st Century first proposed buying the 61% of Sky that it doesn’t already own in December 2016 for £10.75 a share. After the proposed deal hit regulatory and political hurdles, Comcast in February announced its own bid to buy all of Sky for £12.50 per share, or $31 billion. In July, Fox sweetened its offer to £14 a share—only for Comcast to counter the same day with £14.75 per share, valuing Sky at $34 billion. On Friday, shares closed at £15.78, as investors anticipate a higher offer from one side or the other. Amid all that, Comcast and Walt Disney Co. separately traded bids to buy Fox. Disney won that contest, agreeing in July to buy a chunk of Fox assets, including its existing Sky stake, for $71 billion. That leaves a deal for Sky the only bit of unfinished business between the three media giants—pitting Fox, backed by Disney, against Comcast. Disney and Comcast have both said they covet Sky’s international footprint and its ability to sell both telecom services and original TV programming. Mr. Murdoch and his family are major shareholders in both Fox and News Corp , which publishes The Wall Street Journal. Under U.K. takeover rules, Fox and Comcast could still avoid an auction if one or both submit a “best and final” offer by Sept 22. Neither side is likely to do so, according to people familiar with each company’s thinking. Either side could also still drop out of the auction. Sealed-bid auctions are more typical in lower-stakes sales. Major League Baseball used them for Japanese players. In 2006, the Boston Red Sox won the rights to Daisuke Matsuzaka with a $51 million sealed bid that beat out the New York Yankees and other rivals. Telecommunications regulators also hold blind auctions for spectrum, or the airwaves that wireless carriers need. Carriers sometimes hire game theorists to help strategize how to outbid rivals. In Britain, there are guidelines, but no firm rules, governing a sealed-bid auction related to a corporate deal. The Takeover Panel typically works privately with the two bidders to agree on specific procedures, including how companies would submit bids and how those bids would ultimately be disclosed. If two sides can’t agree with the Takeover Panel on auction rules, the regulator can adopt its own procedures. In the event of an auction between Fox and Comcast, such rules could be publicly disclosed sometime next week. An auction could happen shortly after that—even before the Sept. 22 deadline. The Takeover Panel declined to comment on the Sky bidding. In 2007, India’s Tata Steel Ltd. and Brazil’s Companhia Siderurgica Nacional agreed to as many as nine, rapid-fire bidding rounds, in their duel to acquire Anglo-Dutch steelmaker Corus Group PLC. After an auction that went late into the following morning, Tata won with a bid of £6.08 a share, or £6.2 billion. CSN bid £6.03 a share. Each bid was submitted by email. The 2008 auction for Enodis, the food-equipment maker, had just one round. In that case, the panel and companies agreed to only disclose the winning bid. Write to Stu Woo at Stu.Woo@wsj.com and Ben Dummett at firstname.lastname@example.org