Sept 8 (Reuters) - Canada's Alimentation Couche-Tard ( ANCTF )

said on Sunday it was willing to engage in confidential

discussions with Japanese retail giant Seven & i Holdings ( SVNDF )

on its $38.5 billion takeover offer, as it remains keen

on pursuing a buyout.

Shares in 7-Eleven convenience store owner Seven & I ( SVNDF ) rose

2.5% in early Tokyo trading on Monday at about 2,191 yen

($15.35), above the $14.86 per share all-cash proposal from the

Canadian firm that it rejected on Friday.

Seven & i ( SVNDF ) said the deal was not in the best interest of its

shareholders and could face antitrust challenges in the U.S.,

where the combined company would be the biggest convenience

store operator by a considerable margin.

Couche-Tard, which owns the Circle-K brand, said in a

statement it would consider divestitures that might be required

to secure regulatory approvals and believed that it would offer

a compelling combination that would address all regulatory

concerns in Japan.

"Given the mutual benefits of a combination, we are

disappointed in 7&i's refusal to engage in friendly discussions.

We are highly confident that collaborative discussions would

lead to our ability to find increased value for 7&i

shareholders," Couche-Tard said.

Couche-Tard said it was confident of arranging financing for

the deal, which would be the largest-ever foreign takeover of a

Japanese company and the biggest all-cash offer for a firm since

Elon Musk bought Twitter for $40.2 billion in 2022, according to

LSEG data.

"We have secured a letter from our financial advisor stating

that it is highly confident that it is able to arrange the

financing for the proposed transaction, subject to customary

conditions," the Canadian company said.

Seven & i ( SVNDF ) said on Friday that even if Couche-Tard was to

increase the value of the offer "very significantly" it would

still be concerned over whether a takeover would be able to

progress.

Seven & i ( SVNDF ) did not respond immediately to a request for

comment on Couche-Tard's renewed overtures.

While Seven & I ( SVNDF ) is much larger than Couche-Tard in terms of

sales, stores, and employees, its shares have underperformed for

years, drawing complaints from investors including ValueAct

Capital about the company's management and asset structure.

"Seven & i ( SVNDF ) is currently undervalued because of various

reasons to do with structure, timing and corporate culture. Its

underlying long term value is much, much higher" said

JapanConsuming co-founder Michael Causton who publishes on

Smartkarma.

"Couche-Tard knows this and its bid timing speaks to its

skills as a deal maker. But it will be a hard fight to get Seven

& I ( SVNDF ) at a low price ... a lot of investors know its real value."

The deal, if successful, would allow Couche-Tard, which has

a market value of about $52 billion, to boost its global reach

and improve economies of scale.

Bloomberg News earlier reported about Couche-Tard's plans

and said it had not ruled out going directly to the shareholders

with its bid.

($1 = 142.7000 yen)