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Move adds uncertainty to Seven & i's ( SVNDF ) management buyout

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Thailand's CP All says it is not participating in the deal

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A management buyout would be biggest in history if

successful

(Itochu ( ITOCF ) will not proceed with Seven & i ( SVNDF ) buyout, sources say)

By Makiko Yamazaki and Ritsuko Shimizu

TOKYO, Feb 26 (Reuters) - Japan's Itochu ( ITOCF ) is withdrawing

from a buyout for Seven & i Holdings ( SVNDF ) proposed by the retailer's

founding family, two sources with knowledge of the matter said.

After receiving a takeover bid from Canada's Alimentation

Couche-Tard ( ANCTF ) last year, Seven & i's ( SVNDF ) founding Ito family

began talks to take the company private for an estimated $58

billion.

The Nikkei newspaper first reported earlier on Wednesday

that Itochu ( ITOCF ) had decided not to participate in the buyout.

Itochu ( ITOCF ) 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 ( SVNDF ), Nikkei said.

Seven & i ( SVNDF ) and Itochu ( ITOCF ) declined to comment.

Itochu's ( ITOCF ) 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.

The CEO of the Canadian retailer said in Nov it would

persist in its efforts to pursue a deal with Seven & i ( SVNDF ).

Itochu's ( ITOCF ) reported participation was seen as complicated by

the trading house's ownership of one of Seven & i's ( SVNDF ) 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".

The Thai firm did not name the company while adding that it

follows investment policies focused on supporting business

growth. Japanese broadcaster NHK had reported in January that

Seven & i's ( SVNDF ) founding family was asking the CP Group to invest in

a management buyout of the Tokyo-based retailing giant.

CP All's shares ended 10.2% higher at 54.25 baht apiece on

Wednesday in Bangkok.

The Ito family has approached a number of private equity

firms about supporting their bid, sources have said.

Apollo Global Management ( APO ) is considering investing as

much as 1.5 trillion yen in the deal, Bloomberg News reported

last month.

Seven & i ( SVNDF ) is separately nearing a deal to sell a stake of

its non-core assets to private equity firm Bain Capital, two

other sources said.

The retailer has sought to separate non-core businesses that

include its supermarket operations into York Holdings.

The unit will house 31 subsidiaries including the group's

superstores business, baby goods store Akachan Honpo and the

company that operates Denny's restaurants in Japan.

Bain offered around 1.2 trillion yen for these assets,

Reuters reported in December.

Bain declined to comment.

($1 = 149.4400 yen)