Twenty-First Century Fox and Comcast are heading for an auction to settle a takeover of British broadcaster Sky.

The bidding process will officially begin on Friday evening and comes to end on the following day, the U.K.'s Takeover Panel said Thursday, with a maximum of three rounds to decide the fate of the deal. Each bid must be made in cash.

In the first round, the company with the lowest bid — in this case Fox — can make an increased bid for Sky. Comcast then has the chance to increase its bid for Sky in the following round. If the auction procedure has not been concluded during that second round, it is then carried on into a third and final round.

Sky, Fox, Comcast and Disney agreed to an auction to settle the bidding war over the British broadcaster, the panel said.

Disney, which has agreed to buy assets of Fox, could gain control over Sky if Fox comes out of the auction process victorious.

In such auctions, bidders submit secret offers to a third-party arbiter. And while this method is relatively common for commercial transactions, it is extremely unusual when it comes to deal-making for such a high-profile public company.

Sky is currently valued at £27 billion, which translates to more than $35 billion. The firm's share price was marginally lower on the news.

"For now, Comcast seems to be in pole position, but it's not a slam dunk," Paolo Pescatore, a tech, media and telecoms analyst, told CNBC via email.

"There's so much to play for and expect both companies to open up the war chest. This represents a great opportunity to own a prized asset which will prove to be a worthy long term investment."