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Rio Tinto and Mitsubishi Corp have made an offer to buy out Coal & Allied for $1.49-billion Australian ($1.56-billion U.S.), looking to take full control of the Australian coal miner to capture soaring coal prices.

Rio and Mitsubishi offered $122 Australian a share, a 34 per cent premium to the coal miner's last trade, to buy out the 14 per cent they do not already own.

If successful, Rio Tinto would end up with an 80 per cent stake and Mitsubishi with 20 per cent in a bid that values the target at $11.1-billion U.S.

Coal & Allied said the offer was incomplete and was not capable of being accepted.

"We will be carefully considering the indicative proposal but at this stage have not formed any views in relation to either whether a shareholder meeting will be convened, or, more generally, the indicative proposal, including price," said Bryan Davis, Chairman of Coal & Allied's proposal response committee.

Coal & Allied's top institutional shareholder, Perpetual , has backed the offer, Rio Tinto said.

While the offer was at a 34 per cent premium, it is well below Coal & Allied's high of $135 a share in January.

Rio and Mitsubishi still need to finalize their agreement to enter into a joint bid.

Rio Tinto was not immediately available for comment on why the company decided to bid now, when global markets are in turmoil.

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Rio Tinto Plc ADR
+0.44%63.74

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