Under the incomplete, non-binding, conditional and indicative proposal announced to the Australian Securities Exchange today (8 August), Rio and Mitsubishi would acquire all of the shares in Coal and Allied Industries (CNA) they do not already own.

Rio and Mitsubishi initially offered $122 a share, 34 per cent more than the Brisbane-based company's closing price of $91, valuing it at $10.6 billion.

If completed the deal would result in London-based Rio and Mitsubishi owning 80 per cent (up from 75.7 per cent) and 20 per cent (up from 10.2 per cent) of CNA respectively, and the two companies having full control of three coal mines in the Hunter Valley in NSW.

Corporate advisory partners Garry Besson and Gary Lawler are advising CNA along with investment bank Greenhill Caliburn, while partner Richard Kriedemann at Allens Arthur Robinson is advising Rio Tinto. Blake Dawson's Stephen Menzies, Jason Lambeth and Ian Williams are advising Mitsubishi.

If the indicative proposal proceeds it could lead to an off-market takeover bid being made by a company associated with Rio Tinto and Mitsubishi to acquire the CNA shares that they do not currently own. However, CNA has given no assurances that this will be the case.

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The bid comes after Rio's $3.4 billion acquisition of Riversdale Mining Ltd last month and the $4.7 billion pending bid for Macarthur Coal Ltd by Peabody Energy Corp and Arcelor Mittal.