US cable TV giant Comcast has made a formal £22bn bid for Sky that values the UK broadcaster at £12.50 a share.
The move threatens Rupert Murdoch's attempts to take full control of the pay-TV group.
The media mogul's 21st Century Fox has already agreed to buy the 61% of Sky it does not already own - an offer worth about £19bn.
Sky said it was withdrawing its recommendation for the Fox bid following Comcast's move.
Sky shares rose 3.4% to £13.52 in afternoon trading on the FTSE 100.