Rio today unveiled a $1.85 per share cash offer with a scrip alternative, valuing Ashton at $596 million.

But taking into consideration a 5c per share fully franked dividend, which Ashton shareholders will be allowed to keep, the bid is effectively $1.90 a share – well above De Beers’ earlier $1.62 per share offer.

“Rio Tinto’s cash offer represents a premium of 98% to the weighted average price for Ashton shares over the three months prior to the De Beers’ offer,” Rio chief executive Leigh Clifford said.

The scrip alternative is one Rio Tinto Ltd share for every 15 Ashton shares, or one Rio Tinto Plc share for every 15 Ashton shares.

Based on Monday’s closing price for Rio’s Australian shares and Friday’s closing price for its UK shares, the scrip offer values Ashton at $1.91 and $2.11 respectively, Rio said.

Ashton shares were up 31c to $2.04 in mid-afternoon trade on the Australian Stock Exchange.

But analysts were waiting for Rio to outline more fully the synergies and drivers it expects to receive from the takeover.

“Rio has been playing its cards very close to its chest, so the bid came as something of a surprise,” said JB Were analyst Mike Brook.

“But it makes sense if they are in the diamond game. They’re insiders in the [Argyle] project, so they would know exactly what they will get out of it.”

One party that stands to profit no matter the outcome is Ashton’s major shareholder, Malaysia Mining Corporation.

Malaysia Mining has agreed to sell Rio a 19.9% stake in Ashton, after earlier selling an equal interest to De Beers.

Rio was widely seen as the only company likely to have any interest in topping De Beers’ $1.62 offer as it has a 60% stake in the Argyle Diamond Mines joint venture in Western Australia. Ashton holds the remainder.

“It will be interesting to see if De Beers raises its bid because it was adamant that its $1.62 offer fully valued Asthon,” said Brook.