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By Makiko Yamazaki and Ritsuko Shimizu
TOKYO (Reuters) - Japan's Itochu is withdrawing from a buyout for Seven & i Holdings proposed by the retailer's founding family, two sources with knowledge of the matter said, while Canada's Alimentation Couche-Tard reaffirmed its commitment to a takeover.
After receiving a takeover bid from Alimentation Couche-Tard last year, Seven & i's founding Ito family began talks to take the convenience store owner private for an estimated $58 billion.
The Nikkei newspaper first reported earlier on Wednesday that Itochu had decided not to participate in the buyout.
Itochu had considered investing 1 trillion yen ($6.69 billion) in the deal but ultimately saw few synergies between its food and beverage business and Seven & i, Nikkei said.
Seven & i and Itochu declined to comment.
Itochu's decision to bow out casts a shadow on the prospect of the Ito family's proposed management buyout, which would be the largest in history if successful.
Going private would allow the operator of more than 80,000 7-Eleven convenience stores around the world to retain its management and remove pressure from shareholders to sell off more of its assets - as well as eliminate the threat from a bidder that it may see as hostile.
A management buyout offer could also be a tactic to force Couche-Tard to bid more.
A spokesperson for the Canadian retailer said on Wednesday that Couche-Tard remained committed to reaching a mutually agreeable transaction with Seven & i and would retain the store chain's role in emergency response infrastructure.
Japanese officials have said convenience stores and their distribution networks could be used to help disaster victims and have scrutinized how a foreign company's takeover could impact national security.
"Since the public disclosure of our proposal over six months ago, we have engaged many stakeholders in Japan over multiple visits, and we appreciate their ongoing support," a Couche-Tard spokesperson said, adding that it was committed to ensuring customer privacy, regulatory approvals and investment.
Couche-Tard first approached Seven & i in August for the largest-ever foreign buyout of a Japanese company. It had offered $38.5 billion, but raised it to $47 billion after Seven & i rejected the initial bid.
Itochu's reported participation was seen as complicated by the trading house's ownership of one of Seven & i's competitors, convenience store chain FamilyMart.
Charoen Pokphand (CP) Group subsidiary CP All Pcl, which was considering investing, according to media reports, said in a statement on Wednesday it had no intention to participate in the investment in a "Japanese retail company".