Canadian retailer Alimentation Couche-Tard on Sunday said it was willing to engage in confidential discussions with Japanese retail giant Seven & i Holdings on its US$38.5 billion takeover offer and remains keen on pursuing a buyout.

Seven & i shares were up 3 percent in early Tokyo trading Monday.

The 7-Eleven operator has said the US$14.86 per share all cash proposal from the Canadian firm was not in the best interest of its shareholders and could face antitrust challenges in the US.

Couche-Tard said it would consider divestitures that may be required to secure regulatory approvals and believes 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," the Couche-Tard statement said.

Couche-Tard said finance for the deal which would be the largest foreign takeover of a Japanese company in history had been arranged.

"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," it said.

Seven & i, which said last month it had received an offer from Circle-K owner Couche-Tard without naming the price, disclosed the bid on Friday at US$14.86 a share.

The Japanese company said earlier that even if Couche-Tard were to increase the value of the offer "very significantly" it would still be concerned over whether a takeover would be able to progress.

A 7-Eleven spokesperson wasn't immediately able to comment on Couche-Tard's renewed approach.

The combined entity would be the convenience store industry's biggest by a considerable margin and would be the largest all-cash offer for a company since Elon Musk bought Twitter for US$40.2 billion in 2022, according to LSEG data. Mars Inc last month bid US$35.2 billion for food group Kellanova.

Bloomberg News earlier reported about the plans and that Couche-Tard has not ruled out going directly to the shareholders with its bid.

While Seven & i 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.

The deal, if agreed, would allow Couche-Tard, which has a market value of about US$52 billion, to boost its global reach and improve economies of scale. (Reuters)